OLYMPIA – Gov. Jay Inslee on Wednesday proposed a state budget topping $70 billion for the next biennium that would invest money for homelessness and behavioral health services across Washington, including a proposal for a voter-approved referendum to increase funding for housing.

The proposal is intended to guide lawmakers this session as they write budgets for the next two-year cycle that will fund education, housing, new construction, state employees’ salaries, public safety and other programs across the state.

As federal pandemic relief funds run out, Inslee’s budget uses mostly state revenues, as well as a small amount of leftover federal COVID-19 relief money and funds from the new cap-and-trade program – set to go into effect in January – to transition the state to more normal times.

His proposal leaves the state with about $2.6 billion in reserves at the end of the two-year cycle.

Washington survived the COVID-19 pandemic with a “relatively good economy,” Inslee said, while acknowledging many people are still suffering.

“We still have some challenges left unmet,” Inslee said.

There are no new taxes or tax increases proposed, but Inslee plans to ask voters for permission to borrow money to build new housing.

Inslee’s plan would ask voters to approve a referendum to allow the state to issue bonds outside of Washington’s debt limit to raise $4 billion over the next six years. The amount of obligation debt the state can take on is restricted, but voters can approve bonds outside the limit. It would require a simple majority to pass. There would be no tax or fee increases for voters, according to Inslee’s office.

The last referendum of this kind failed in 2010, when lawmakers asked voters to approve bonds for energy-related projects in public schools, colleges and universities.

Inslee said Wednesday he is optimistic that Washington voters want to see the housing problem solved.

If approved, the $4 billion will go toward the capital budget, which funds construction projects across the state, and likely would be used to address homelessness, housing and behavioral health, Schumacher said.

The capital budget currently allows for the construction of 2,200 new housing units, but the $4 billion would allow for the construction of about 5,300 additional housing units during the next two years and 19,000 in the following two years, according to the governor’s office.

Washington needs more than 1 million additional housing units by 2044 to accommodate the state’s growing population, Inslee said Wednesday.

“We’re not going to solve the problem unless we build and unless we build quickly and unless we provide support for many of the people in these programs who need more than a roof over their heads,” Inslee said.

Much of the new housing would be built for homeless people, those with developmental disabilities or chronic mental illness and those making less than 80% of average median income. It also would provide down payment and closing cost assistance for low-income, first-time homebuyers.

The referendum also would help fund construction for a new behavioral health diversion and treatment facility for offenders with behavioral health needs.

Inslee’s budget also includes nearly $900 million to construct a new 350-bed forensic hospital on the Western State Hospital campus. Other behavioral health priorities include expanding early treatment, diversion and intervention services; expanding the 988 crisis team; providing additional navigator resources for families with children; and improving compensation rates and training opportunities for behavioral health workers.

Inslee’s budget proposal will use the remaining $202 million in federal relief funds for emergency housing, food programs, public health and special education.

Over the last two years, Washington lawmakers have spent more than $14 billion in federal relief funding for people and programs affected by the COVID-19 pandemic on business assistance, rental assistance, housing, transportation, public health, child care and local governments.

Legislators will use Inslee’s budget proposal to guide their budget decisions in the upcoming 105-day session, which starts Jan. 9.

Senate Democrats’ top budget writer, Christine Rolfes, D-Bainbridge Island, said Inslee’s budget was a “solid roadmap” to address the state’s needs. She said she was encouraged with his focus on behavioral health investments and his commitment to growing the workforce and building new facilities.

“Legislators are deeply concerned about the lack of affordable housing in communities across Washington, and I appreciate the governor’s commitment to address this urgent need,” she said in a statement.

Republican budget leaders, however, were critical of Inslee’s plan. Sen. Lynda Wilson, R-Vancouver, said Inslee’s plan spends “just about every tax dollar available” while still failing to invest in answers to Washington residents’ biggest concerns, such as public safety, cost of living and learning loss.

Wilson supported Inslee’s behavioral health proposals but said his ideas will do nothing in the short-term to help with drug overdoses, crime and hiring more law enforcement officers.

She also criticized Inslee for failing to provide tax relief for families.

“Unfortunately, the governor is showing once again that in his world, government’s desires come ahead of families’ needs,” Wilson said in a statement. “The Inslee budget represents a rate of spending growth that is more than double the growth in median wages in our state over the past decade. The working people of our state can’t continue to afford that.”

State employee raises, climate, education, more

Inslee’s budget also proposes to fund the Working Families Tax Credit, which passed in 2021 and will provide low-income working families with a $1,200 tax credit beginning next year.

His proposal also funds the state employees’ collective bargaining agreement decided earlier this year, which includes a 4% raise in 2023 and 3% increase in 2024, and a $1,000 incentive payment for employees who received COVID-19 boosters.

It also uses funding from the cap-and-trade program to fund a number of climate policies, including citing and permitting clean energy and transmission infrastructure; creating a service program to build clean-energy projects; and using emerging energy technologies and systems in homes.

Inslee announced earlier this week he was requesting $10 million in funding for a new clean energy institute at the Washington State University Tri-Cities campus.

For education, Inslee’s budget adds 2,000 slots each year for childcare programs and increases provider rates by 40%. He also proposes to continue funding social-emotional learning supports for students, such as nurses, social workers, counselors and others.

Some Eastern Washington highlights of Inslee’s budget include funding a bachelor’s degree in nursing at Eastern Washington University; a public health degree program at Washington State University campuses in Pullman, Spokane and Vancouver; renovating the Spokane Hatchery and creating a mobile licensing unit in Eastern Washington to help service people who have difficulty accessing a Department of Licensing office.