SB 5151
In CommitteeSenate
Annual state spending growth
Limiting annual state spending growth to median worker wage growth, with excess revenues dedicated to property tax relief.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill caps annual state spending growth to the 10-year average of median wage growth, starting in 2026, and redirects any excess state revenues to reduce property taxes. It also adjusts the spending limit when funding for state programs shifts between accounts and clarifies how property tax limits are calculated under the new cap.
- Establishes a state expenditure limit beginning in fiscal year 2026, capping general fund and related fund spending to the prior year’s limit plus an annual growth cap equal to the 10-year average of median wage growth.
- Requires the Economic and Revenue Forecast Council to calculate the annual spending growth cap each December for both the current and next biennium.
- Mandates that if state program costs or funding are shifted *out* of the general fund, the spending limit must be reduced; if costs are shifted *into* the general fund, the limit must be increased—with specific exceptions (e.g., budget stabilization account, lottery education funding).
- Requires the Department of Revenue to reduce property tax rates each year by the amount of excess state revenues above the spending limit—starting in December 2027.
- Amends property tax levy rules to ensure the spending limit reduction does not affect how the state calculates its own property tax levies.
Who is affected
- State agencies and programs — State government agencies and programs that rely on general fund or related funds will be constrained to spend no more than the annual spending limit, which grows based on median wage growth.
- Local taxing districts (e.g., school districts, cities, counties) — Local governments may see reduced property tax rates if state revenues exceed the spending limit, as excess revenues are redirected to property tax relief.
- Washington residents (especially middle-income households) — Workers and households whose income is near the median wage may benefit indirectly from slower state spending growth and potential property tax relief.
- State Treasurer’s Office — The state treasurer must ensure all expenditures stay within the legal limit and could face penalties for violations.
Pro/Con Analysis
Stronger case for concerns
Potential Benefits (3)
Direct property tax relief for homeowners—especially those in high-property-tax jurisdictions—by reducing state levies with excess revenues, which could provide meaningful savings for middle-income households who own homes.
FinancialPeopleRef: Sec. 3(1), (2)By requiring the spending limit to adjust when program costs shift out of the general fund, the bill aims to prevent double-counting and improve budget transparency, which may help local governments better anticipate state funding changes.
Local GovernmentLean peopleRef: Sec. 1(6)(b); Sec. 2(1)Linking the spending cap to median wage growth—rather than inflation or total state revenue—could encourage more disciplined budgeting and reduce structural deficits over time, potentially stabilizing long-term fiscal outlook.
FinancialLean peopleRef: Sec. 1(6)(a), (b); Sec. 3(1)
Potential Concerns (5)
Local taxing districts (e.g., school districts, counties, cities) may face increased pressure to raise local property tax levies to compensate for reduced state revenue sharing and capped state spending, especially if state programs are shifted out of the general fund and the spending limit is reduced accordingly.
Local GovernmentLean industryRef: Sec. 1(2), (5), (6)(b); Sec. 2(1)The spending cap tied to 10-year average median wage growth—rather than inflation or population growth—risks underfunding essential state services over time, especially during periods of high inflation or rising demand (e.g., healthcare, corrections, social services), potentially degrading service quality and access for lower- and middle-income residents.
FinancialIndustryRef: Sec. 1(3), (4), (6)(b); Sec. 3(1), (2)By constraining general fund spending to median wage growth—ignoring rising costs in areas like law enforcement, emergency response, and behavioral health—the state may be unable to keep pace with growing public safety needs, especially in rural and underserved communities.
Public SafetyIndustryRef: Sec. 2(1), (2); Sec. 3(2)While the bill promises property tax relief, the mechanism—reducing state levies only by *excess* revenues above the cap—means relief is contingent on economic conditions and may not materialize in downturns when households need it most; in fact, during recessions, median wages often fall, lowering the cap and tightening the limit further, potentially increasing pressure on local levies.
HousingIndustryRef: Sec. 1(3), (6)(b); Sec. 3(2)The bill’s rigid spending cap may limit the state’s ability to respond flexibly to economic shocks or emerging needs (e.g., workforce development, small business grants), potentially hampering economic resilience and slowing recovery in vulnerable sectors.
Business & EmploymentLean industryRef: Sec. 1(2), (6)(a); Sec. 2(1)
Who Is Most Affected
Middle- and lower-income homeowners may benefit from property tax relief, but those in high-need areas may suffer if local services (e.g., schools, fire districts) cannot make up for reduced state support. The benefit is concentrated among property owners, excluding renters and low-income households without equity.
State agencies face hard constraints on growth, potentially limiting program expansion or inflation adjustments. This may disproportionately impact human services, corrections, and behavioral health programs that serve vulnerable populations.
Local taxing districts may see reduced state revenue sharing and increased pressure to raise local levies to maintain services, especially if state programs shift out of the general fund and the cap is lowered accordingly.
Renters, low-wage workers, and those without property ownership receive no direct benefit from the property tax relief mechanism, and may face higher costs for public services due to underfunded state programs.
The state treasurer gains new enforcement responsibilities and faces penalties for overspending, increasing accountability but also legal risk in volatile budget environments.