(The Center Square) – Puget Sound-based commerce organizations are strongly urging state lawmakers not to raise taxes on businesses to address a projected budget shortfall and instead find ways to live within their means.
Earlier this week, Gov. Bob Ferguson said the updated revenue forecast adds another billion to the projected operating budget shortfall over the next four years, bringing the total gap to $16 billion.
Washington Senate and House Democrats managed to pass respective $78.5 billion and $77.8 billion operating budgets for the next biennium. These officials have proposed new taxes that would generate between $13 billion and $17 billion for the state.
However, on Tuesday, Washington state Gov. Bob Ferguson rejected both budgets due to their reliance on taxes.
This move encouraged the commerce organizations, but they are still warning of the possible impacts of the proposed tax increase.
The Association of Washington Business, Bellevue Chamber of Commerce, Seattle Metropolitan Chamber of Commerce, and Washington Roundtable held a press conference on Thursday discussing the impacts of the largest proposed tax increase in state history.
According to the commerce organizations, these proposals would help to maintain a dangerous trend of unsustainable spending.
State lawmakers are looking at Seattle’s JumpStart Payroll expense tax as inspiration for a similar state-level tax. However, the city’s tax on big businesses was $47 million lower than projected in 2024, a huge blow to the revenue stream Seattle has become reliant on amid its own budget shortfalls.
The huge loss in actual revenue is at least in part the result of the city’s largest companies moving employees out of town. This includes Amazon moving thousands of corporate employees to Bellevue, which Seattle Metropolitan Chamber of Commerce CEO Rachel Smith mentioned.
Smith said a similar tax at the state level would result in businesses moving out of Washington altogether.
The economic uncertainty occurring at a national level does not help. Smith said she is astonished that lawmakers are considering the largest tax proposal in state history amid the national backdrop.
“I would say candidly that leaders at all levels of government need a bit of a reality check here,” Smith said during the press conference. “Whether you want to tax the rich to be righteous or enact tariffs to drive an ideological policy goal, ask yourself: when has kamikaze economic policy ever worked for people?”
Business owners also presented the impacts of a post-pandemic economic landscape on their own businesses. For instance, Ascend Hospitality Group CEO Elaina Morris said she has already had to close six of her restaurants as a result of minimum wage increases and real estate excise taxes she is subject to.
Morris said that the higher taxes proposed by state lawmakers would further exacerbate the economic hardship businesses face.
Bellevue Chamber of Commerce CEO Joe Fain noted that Washington has the highest business failure rate in the country.
Washington’s largest companies are publicly supporting the commerce organizations’ message to lawmakers.
More than 60 executives of Washington-based companies signed onto the letter to Senate and House leaders. Notable companies that signed onto the letter include Alaska Air Group, Nordstrom, T-Mobile, Microsoft, Puget Sound Energy, Redfin, Amazon, Seattle Mariners, and Costco, among others.
The letter to state leaders notes that Washington’s revenue sources are projected to rise by 6.8% in the 2025- 2027 biennium and 7.7% in the 2027-2029 biennium.
“To go with a $17 billion dollar tax increase now, much of which may not even materialize, is really setting us up for disaster moving forward,” Fain said.
