Governor Ferguson Completes Executive Actions on 2025 Bills passed legislature -- Only $25 million in Operating Budget vetoes.

Yesterday, May 20, the 2025 legislative session officially ended as Governor Ferguson wrapped up post-session bill action. Speculation mounted as Governor Bob Ferguson contemplated budget and revenue legislation. Would Ferguson approve the operating budget in full? Issue selective vetoes? Or potentially prompt a special legislative session to revise critical components of the operating budget supported by new revenue? In the end, Ferguson’s vetoes were minimal, striking only about $25 million out of a $77.9 billion two-year spending plan. As for the revenue package, all the B&O tax increases, all sales tax increases on services, the tax increase on capital gains, electric vehicles and liquor all escaped any veto action. Ferguson restored one exemption used by community banks, explaining that it needed to be restored to address affordable housing.

At a press conference on Tuesday after taking final action on bills Governor Ferguson confirmed he had signed the state budgets and related revenue bills, issuing only limited partial vetoes, which can be found here by clicking on Signed/Partial Vetoes. Ferguson emphasized a “careful, line-by-line” review of the budget and acknowledged the difficulty of several decisions.

A key feature of the operating budget is a $1 billion increase in K-12 education funding, with a strong emphasis on special education. Though Washington has been facing a $16 billion projected shortfall, Ferguson noted that no state employees will be furloughed, despite his original recommendation, and all current cash benefit programs – including TANF and food assistance like SNAP – will remain unchanged. Ferguson noted the budget also maintains the state’s rainy day fund and allows flexibility to respond to potential future federal funding cuts. Washington state receives approximately 20% of budget revenue from the federal government.

Concerning the governor’s $25 million in operating budget vetoes, Ferguson described the process as “intentional and precise”. Notably, he strongly signaled the need for further refinements to revenue legislation over the interim – especially changes to the Business & Occupation (B&O) tax and tax on services – before the 2026 supplemental budget is signed next year. While he ruled out calling a special session for now, he acknowledged that ongoing discussions around revenue measures would continue and has instructed staff to begin reaching out to stakeholders. “We need to spend more time on these bills to avoid unintended consequences,” he said, suggesting more than just technical corrections are ahead.

On the Senate’s last-minute passage of a proposed wealth tax that would have removed the exemption for intangible assets, Ferguson expressed cautious openness to a “small, targeted” version. However, he noted the likelihood of legal and voter challenges and made clear he would not rely on it to balance the budget.

(Content provided by NYBA Lobbyist Jim Hedrick)