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    Dear Friends and Neighbors,

    The 60-day legislative session began several days ago on Jan. 12, and budget and tax policy are already dominating the conversation in Olympia.

    Between the operating and transportation budgets passed last session, Democrats enacted the largest tax increase in Washington state history—approximately $12 billion in new and increased taxes. Despite this historic tax hike, the Legislature is now entering this short session facing a significant budget shortfall, driven largely by overspending and poor budgeting decisions made during the 105-day session last year.

    Opportunities to close this gap through spending reductions appear limited. Democrat leadership had 105 days in the last session to reduce spending, but instead chose to increase state spending by roughly 8%. As a result, legislative leadership is now signaling that additional tax revenue—rather than restraint—will be the primary focus.

    Here is a list of some of the most concerning tax bills being considered:

    • HB 1320 and HB 2045 – Business and Occupation (B&O) tax increases: These bills would increase B&O tax rates and add new surcharges on employers. Because the B&O tax is applied to gross receipts—not profits, many employers would likely pass these costs on to consumers through higher prices.
    • HB 1334 – Property tax increase: This proposal would allow local governments to increase their property tax revenue limit from the current 1% to up to 3% annually. Higher property taxes affect homeowners directly and often lead to higher rents for tenants.
    • HB 1532 – Sales tax changes: This bill would change how sales taxes are applied and collected and would authorize certain cities to impose an additional sales tax of up to 0.3%. This could increase compliance costs for businesses and would likely be passed on to consumers through higher prices.
    • HB 1702 – Public utility tax expansion: This bill would expand or increase public utility taxes at the county level, raising monthly bills for electricity, water, sewer, and other essential services. Utility taxes disproportionately impact lower- and middle-income households.
    • HB 2100 – Payroll tax: This bill proposes a 5% payroll tax on salaries exceeding $125,000 for large businesses (over $5 million in gross revenue, $7 million in wages, and 20+ employees).

    In fact, as many as 65 bills sponsored by members in the majority party are now in play that would raise taxes and fees, if passed this session.

    Realistically, only a few of these revenue sources could generate enough money quickly to address the shortfall, including a sales tax increase, higher taxes on employers, an increase in excise taxes (such as expanding the capital gains tax to cover the sale of personal residential property), and property tax increases. All these taxes were increased last year, but many of them have not yet been fully implemented.

    In addition, Democratic leadership has promised to pursue a state income tax on “millionaires.” Even if enacted, the earliest such a tax could generate revenue would be 2029, and it is expected to face legal challenges. History in other states suggests that once an income tax is established, it is often expanded over time to include lower- and middle-income earners.

    These additional taxes would not replace any existing taxes, including the income tax, but would be added on top of the current tax structure.

    With a Democratic supermajority in both the House and Senate, any tax proposal can pass without a single Republican vote.

    As your representative, I will continue to advocate for responsible budgeting, transparency, and policies that protect working families and small businesses from further tax burdens.

    Staying engaged in the legislative process
    Your voice matters. Staying informed, showing up, and speaking out are critical. If citizens don’t speak, the loudest voices in the room are the ones that get heard. I encourage you to become involved during the 2026 legislative session. There are several ways to engage directly in the legislative process:

    Finally, a personal update: I recently changed my last name to Michelle Valdez following my marriage. While my name has changed, my commitment to serving the 26th Legislative District has not.

    Thank you for the honor of representing you. I look forward to keeping you informed as the session progresses.

    Sincerely,


    Michelle Valdez

    State Representative Michelle Valdez, 26th Legislative District
    RepresentativeMichelleValdez.com
    427B Legislative Building | P.O. Box 40600 | Olympia, WA 98504-0600
    michelle.valdez@leg.wa.gov
    (360) 786-7802 | Toll-free: (800) 562-6000