Washington Democrats ditch wealth tax, promise ‘tools’ instead—But what are they?

After months of buzz, the much-hyped wealth tax that could have pumped $4 billion into Washington’s cash-strapped budget is officially dead after Washington Governor Bob Ferguson said he may veto the idea because it could be challenged in court. Now, state Democrats are scrambling to fill a $16 billion budget hole without the one big revenue source that progressives were practically begging for.

“It’s very likely that no part of our budget will be based on a wealth tax,” said Senate Majority Leader Jamie Pedersen (D-Seattle), who led the Senate Democrats’ press briefing Wednesday.

While Democrats tried to put an optimistic spin on their “critical pivot,” the move to axe the wealth tax left plenty of folks—both inside and outside the Capitol—asking: What now?

Turns out, the answer is…a mystery bag of “tools.”

Pedersen said the party already has “plans B, C, and D” in the works, though what those plans include remains mostly under wraps.

“I would anticipate within the next week…we would probably have something along the lines of a plan that we start talking about,” he said.

A budget built on ‘tools’ and cuts

Asked about specifics, Pedersen promised a “set of revenue bills that will need to pass out of both chambers,” but gave little detail beyond that.

The new patchwork of taxes or reforms—affectionately referred to as “tools” by leadership—most likely includes changes to property tax caps, a potential payroll tax on large corporations, and smaller revenue sources like a tax on storage units and hikes in tobacco, nicotine, and gas taxes.

There are other tweaks to the state’s famously regressive tax code, but we won’t know for sure until early next week, Pedersen said.

Representative Monica Jurado Stonier (D-Vancouver) defended the retooling, saying, “Our primary goal is a balanced budget that invests in the things that our constituents care about.”

And while Democrats say this course correction has been in the works for a while, the loss of the wealth tax still stung.

“There’s definitely some disappointment among many of our members as well as many of our constituents,” House Majority Leader Joe Fitzgibbon (D-Seattle) said. “That particular tool is not going to be part of our budget solution this year.”

Still, he insisted that “public pressure is important and welcomed” and that the conversation about taxing the ultra-rich isn’t going away. Just not this session.

Property tax tension

One of the most likely “tools” to get serious floor time is a change to the state’s property tax cap, upping it from a 1% to a 3% growth rate. That move has already triggered heated backlash from Republicans, small property owners, and others who claim they’re being hit from all sides.

“There’s a lot of demagoguery about that proposal,” Pedersen said bluntly, pushing back on claims that property taxes would skyrocket. “To get to a $1,000 change, I think you have to be talking about a home that’s probably worth, what, $5 million at least.”

Senate Democrats are also emphasizing that their bill includes significant tax relief for low-income seniors and disabled veterans.

“We are doing significant tax relief as part of the property tax proposal,” Pedersen noted.

Cuts are coming—But how deep?

With the wealth tax off the table and limited options for big, immediate cash, Democrats admit that deeper budget cuts may be inevitable.

“We are actively considering both each other’s cuts that were not in our own budget and additional potential reductions that we’ve sought from the governor’s office,” Pedersen said. “Simply, they’re not going to get what they want.”

Despite the scramble, party leaders insist they’ll hit their deadline.

“We remain firmly committed to and optimistic that we will get our work done on time,” Pedersen said.

The goal is to pass a final budget by Sunday, April 27.

And if you’re wondering how closely they’re working with Ferguson to avoid last-minute vetoes? The answer is: Very.

“We do not plan to surprise him with anything,” Pedersen said.

For now, the path forward is a blend of cautious optimism and political improv. The wealth tax may be gone, but the hunt for revenue—and a balanced budget that doesn’t spark a voter revolt—is just getting started.

Stay tuned. The “tools” are coming.

Matt Markovich is the KIRO Newsradio political analyst. Follow him on X.

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