Gov. Ferguson has tried to Have it Both Ways with the New State Budget

Gov. Bob Ferguson’s final day of his first year of bill signing reminded me of a phrase from corporate America: “disagree and commit.”

This directive, which was on the wall of every meeting room at the chip-making giant Intel, called for a robust debate over whatever strategy was under consideration followed by a ruthless dedication to executing that strategy. Anyone who has ever been on the losing end of one of those debates knows that the “commit” part can feel like bitter capitulation.

So it was intriguing to watch Ferguson’s warm embrace — figuratively and literally, there were lots of hugs for progressive lawmakers on Tuesday — of virtually all of the highly progressive and massively expensive work of the 2025 Legislature. It’s probably more instructive to think about what Ferguson didn’t do in the last few weeks.

He didn’t heed calls from Main Street that an across-the-board hike of the business & occupations tax and a substantial temporary surcharge on the largest companies in these parts would hurt many of the state’s smallest businesses and ultimately wind up costing consumers more money.

He didn’t listen to pleas from sectors of the economy — public and private — that stand to be hit hard by extending the retail sales tax to temporary staffing services, a change that effectively increases the price of those services by roughly 10%. That’s likely to have broad unintended consequences, including for health-care organizations and school districts, the largest beneficiaries of state revenue, which will weirdly have to give significant amounts of that money back to the state and local governments.

Most importantly, he didn’t veto any significant part of the budget package and force lawmakers back to Olympia for a deeper round of cuts to both spending and taxes. In fact, he didn’t veto anything of real consequence except for nixing the repeal of a tax advantage for community banks.

The losers stayed losers, and the winners stayed winners.

Tuesday’s version of Ferguson was markedly different than the aisle-crossing governor he offered in his inaugural address in January, or the finger-wagging budget hawk who popped up intermittently during the session to scuttle the wealth tax and urge budgetary restraint.

In the end, Ferguson got enough of that restraint and tanked enough of the politically dicey progressive tax proposals to declare victory and go home. There’s no wealth tax, although the Senate’s performative vote for one such tax on the session’s final days indicates that this idea isn’t dead. Seattle’s JumpStart tax wasn’t extended statewide, which averts a costly ballot-measure battle with Microsoft and other tech giants.

Several radio stations had me on the air over the last few weeks to prognosticate whether Ferguson would veto some or all of the budget and call lawmakers back into special session. My answer: “I don’t see how that would make the situation any better.”

A midsummer convening of the Legislature would have featured the same big progressive majorities on both sides of the rotunda, with the same spending priorities and the same well-heeled special interests. There are simply too many progressive Democrats in both chambers to realistically envision the kind of bipartisan budget-cutting deals that happened in the 2000s and 2010s, when Republicans controlled the Senate. Why deal with all that bad blood and drama for an incremental improvement?

That left Ferguson with little option but to sign one of the largest tax increases in state history and try to brand it as restraint. The intriguing thing going forward is whether any significant political consequences will ensue for the governor or Democrats in the Legislature for transferring billions more dollars from the private side of the economy into the state’s coffers.

The tax increases themselves aren’t particularly vulnerable to a ballot-initiative challenge because they aren’t novel ideas for raising money, except for that new tax on Tesla, which figures to play really well with the Musk-haters on the left. Meanwhile, Democrats are clearly banking on the combination of a continued leftward shift in the electorate and a damaged and diminished Republican opposition to deliver a collective shrug at the ballot box.

We’ll get an early test of that theory in November when Democrats will try to hold on to two Senate seats that are theoretically winnable by Republicans.

This article also appeared in the author’s political website, The Washington Observer.