Tracy Ellis: Welcome to The Elephant in the Dome, the official podcast of the Washington State Senate Republican Caucus. I’m Tracy Ellis with Senate Republican Leader John Braun and Senate Republican budget lead Chris Gildon. The budgets are out now, and this is the budget for the remainder of the biennium. The budget they wrote last year and this budget basically make sure it balances. Is that correct?
Sen. John Braun: It’s true that in the biennium it’s balanced, but if you look long term at the four‑year outlook, this budget as proposed is $878 million in the hole before it’s even passed. So yes, it’s balanced for the first couple years, but structurally it’s already unbalanced. It’s an $80 billion house of cards — a shaky foundation.
Sen. Chris Gildon: One thing that really stood out to me was expanding the Working Families Tax Credit to people making over six figures. That’s not what it was meant to be. It was meant to help people who actually need help — not people earning $118,000 or $130,000 a year. It’s strange to hear “tax the rich” from the majority party and then see proposals that give tax breaks to people doing pretty well already.
And on top of that, they set aside money in 2029 for free breakfast and lunch for all kids. But about 75% of kids already qualify for free or reduced lunch. This expansion just gives free lunch to kids from affluent families.
Sen. John Braun: When this conference budget came out, I noticed there had been a push from the governor and some Democratic legislators for tax relief tied to the income tax package. I disagree with the income tax itself, but I supported the idea of more tax relief. During negotiations, the House wouldn’t agree to meaningful tax relief. This income tax hits small and medium‑sized businesses — 50 to 500 employees — the heart of our economy. Instead of helping them, the budget offers a little relief to very large corporations and to very small one‑person operations, but nothing meaningful to strengthen the broader economy.
Sen. John Braun: They’d rather expand government programs and encourage reliance on government instead of building a strong economy that creates opportunity. They showed their ideological leaning clearly: no meaningful tax relief, even though they always talk about fixing regressive taxes.
Tracy Ellis: I’m glad you brought up the income tax. For people who haven’t been following, the income tax has now passed out of both the House and Senate. But it’s not part of this biennium’s budget. That money arrives further down the line — and only if the governor signs it, it survives a court challenge, and voters don’t overturn it. But they are counting on that income tax revenue in future years to balance budgets.
Sen. Chris Gildon: And that’s incredibly unsafe. Even Gavin Newsom in California has said you shouldn’t rely on this kind of income to fund core programs. People subject to this income tax are mobile — they can move. Bezos already left. We just learned the former CEO of Starbucks is moving to Florida. People are making decisions right now that affect the future state budget.
Sen. John Braun: And he’s not the only one. Our colleagues on the other side don’t want to acknowledge capital flight, but it’s real. Some wealthy people say they’re moving; many don’t announce it. But their income goes with them. Counting on a tax aimed squarely at high earners is false hope.
Sen. Chris Gildon: Lack of an income tax is part of why our economy grew. It helped Microsoft, Amazon, and so many others thrive. When you change that climate with an income tax, you discourage innovation. Businesses can — and will — move.
Tracy Ellis: This budget is over $80 billion. Ten years ago it was about $40 billion. So it’s doubled?
Sen. Chris Gildon: That’s right. And how many people’s incomes have doubled in that time? Not many.
Sen. John Braun: Household income growth is about half that rate. The go‑to move for balancing the budget has become raising taxes — and that’s not serving Washington well. State economists are being cautious because they can see businesses responding to these taxes. Some major employers — Amazon, T‑Mobile, Microsoft — are laying off or growing elsewhere. Many others quietly do the same. This will impact our economy, whether tomorrow or in a year.
Sen. John Braun: Another issue: they assume extremely low budget growth — 2.2% — when real growth has been around 15% year over year. If they don’t hit that low growth rate, we’ll have enormous deficits. And we know how they respond to deficits: new taxes. Big businesses avoided new taxes this year, but next year they could face a wealth tax, a payroll tax, or a corporate income tax if spending isn’t controlled.
Sen. Chris Gildon: Every state that has implemented an income tax started by saying it would be narrow and targeted. But over time, it always expands until everyone pays.
Tracy Ellis: Is this a doom‑loop situation? Raising taxes hurts the economy, which lowers revenue, which leads to raising taxes again?
Sen. John Braun: I think we’re already there. If the income tax passes and they approve the budget as written, Washington is headed into a downward spiral.
Sen. Chris Gildon: They’re assuming an unrealistically low growth rate even though actual growth is far higher. We’re already $878 million short in 2028. That means $1 billion they’ll have to find next year.
Tracy Ellis: Last year you put out the Save Washington budget. If Republicans were in charge and that budget passed, would it still be balanced?
Sen. Chris Gildon: It was a responsible budget with reasonable growth — still higher than 2.2%, so for Democrats to claim they’d meet that is unrealistic.
Sen. John Braun: Exactly. There’s no way they could do it. Even if they rejected collective bargaining agreements next year, they still wouldn’t hit 2.2%. That means deficits and more taxes.
Sen. Chris Gildon: You say this all the time, John — until we bend the cost curve, we’ll stay in this doom loop.
Tracy Ellis: So how would things be different?
Sen. Chris Gildon: Here’s a simple example: last year, Democrats funded $4 billion in pay raises for state employees. We said that was not financially feasible. We proposed giving every state employee a $5,000 bonus instead. They made a choice to fund $4 billion in raises. And this year’s budget shortfall? About $4 billion.
Tracy Ellis: And the income tax, if passed, would bring in about $4 billion a year.
Sen. John Braun: Yes. This is a huge new tax.
Sen. John Braun: And the Save Washington budget wouldn’t have required new taxes. Without new taxes on businesses, we likely wouldn’t have seen the downturn in state revenue. Living within your means and not draining the economy has helped Washington for decades. Democrats are moving the opposite direction — and we’re seeing the results: flattening or declining revenue and an economy losing strength.
Sen. Chris Gildon: They’ll eventually “solve” future deficits by lowering income tax thresholds — expanding it to more people. It’s the easiest lever for government to pull.
Sen. John Braun: And they’re already doing it. Instead of adjusting income thresholds annually, they moved to every two years — meaning more people fall under the tax simply due to inflation. Without touching the law, more and more people will be pulled in. And when deficits come, they’ll expand it even further. It becomes an income tax for everyone.
Tracy Ellis: Some say Washington has always had a progressive culture but a conservative tax system. Has that helped the economy?
Sen. John Braun: I’d describe it differently. Our tax structure isn’t highly regressive or progressive — studies put us near the middle once benefits are considered. But one thing is clear: without this tax system, we wouldn’t have had the economy we’ve had for decades. Microsoft came to Washington largely because of the tax climate. Recently, we saw a major local investor relocate to Georgia, taking future investment out of the state. These shifts mean we won’t see future Amazons, Microsofts, Starbucks, or Costcos growing here.
Migration data is clear: people have long moved to states without income taxes — including Washington — until new taxes began piling up. Now our domestic migration is negative. People are saying Washington is no longer the place to be.
Sen. Chris Gildon: When people speak so consistently against an income tax, we should listen — not find ways around it.
Sen. John Braun: The majority is working hard to confuse and limit the voters’ ability to overturn this. They believe they know best, but their policies will eventually undermine the very social services they claim to champion.
Sen. Chris Gildon: And they’ve been disingenuous in selling the income tax. They claim it funds K‑12 schools and health care. Nothing in the bill earmarks money for either.
Tracy Ellis: And you’re saying even with the income tax, deficits continue?
Sen. Chris Gildon: Yes. The budget spends $5 billion more than projected revenue — even with the income tax.
Sen. John Braun: Last year alone, the state added $9.5 billion in new state taxes and $3 billion in local taxes — $12.5 billion total. The income tax adds another $3.5 to $4 billion per year. Over four years, that’s nearly $30 billion in new taxes. Yet they still end up underwater.
Sen. Chris Gildon: They’ve shown no ability to control spending. And when spending only increases, the income tax inevitably expands to everyone.
Tracy Ellis: They say this is all because of federal changes and increased Medicaid costs.
Sen. John Braun: That’s a ruse. Yes, federal policy has an impact — but it’s tiny compared to an $80 billion budget. The Medicaid issue is about $178 million. The income tax brings in $7–8 billion every two years. Their claim doesn’t hold up.
Sen. Chris Gildon: And we’ve proposed real savings — like addressing “concurrent Medicaid,” where 130,000 people are enrolled in Medicaid in Washington and another state. That costs us hundreds of millions. Fixing it wouldn’t cut services — but they refuse.
Sen. John Braun: Same with drug problems in prisons. Instead of buying scanners or canine units for less than $2 million, they want to spend $50 million on new prison beds. Their solution is always: spend more.
Tracy Ellis: People say Republicans don’t want to spend money on anything. But there are plenty of things you believe in funding — like special education.
Sen. John Braun: Look at our record when we were in the majority: we funded priorities that actually moved the needle. The Save Washington budget grew the budget responsibly, saved money by fixing inefficiencies, and maintained services. Small savings add up.
And the executive branch could save even more by bringing workers back in person and reducing waste. Since 2021, the state added around 10,000 new employees — still about 8,000 above prior levels. No one else is doing that. Services aren’t better than five years ago — ask anyone.
Sen. Chris Gildon: Even last year, facing a $7.5 billion shortfall, they added 1,800 new employees. It’s disconnected from reality.
Tracy Ellis: Thanks for taking time during the busy session to talk about these issues. Senator Chris Gildon and Senator John Braun — I’m Tracy Ellis, and this is The Elephant in the Dome from the Washington State Senate Republican Caucus.