Governor Inslee has reached an agreement with union employees to provide $412.2 million in mid-budget cycle pay raises. The increase is $241.7 million for the General Fund with the total budget increase being $412.2 million. According to the Washington Federation of State Employees: “This General Government agreement will bring the largest pay increase and lump sum payment negotiated in several years.”

The Office of Financial Management said in a memo describing the pay raises:

“Our improved economic and revenue forecast allows us to address compensation needs and recognize the hard work and commitment our employees have shown throughout the pandemic. In light these circumstances, we agreed to re-open our 2021–23 contracts for the limited purpose of bargaining over compensation.

A summary of our workforce investments include:

• Providing a general wage increase [3.25%] for the last fiscal year of the biennium to recognize the growth in our economy and associated costs incurred by our employees.
   
• Recognizing our lower wage workers by providing a graduated lump sum payment based on annual income. Lower-wage workers will receive a larger lump sum payment amount while those who make more will receive less of a lump sum.”

With a balanced budget, billions in reserves, and $3.6 billion in unanticipated revenue growth (as of September Revenue forecast) it is clear there is plenty of budget capacity to provide these union pay raises while also finally cutting the state sales tax. For example, for each 0.1% reduction in the state sales tax rate, approximately $306 million in tax relief could be provided. When it was first imposed in 1935, Washington’s sales tax rate was 2.0%. It is currently imposed at 6.5% and has not seen a rate reduction since 1982.

Now that the Governor has agreed to $412.2 million in mid-budget cycle union pay raises, one of the main questions for the 2022 Legislative Session will be whether taxpayers will also be provided a long overdue sales tax cut. Failing to provide tax relief will mean that government union employees will be the only ones to see the benefit from the state’s record revenue growth that is coming in above and beyond what is needed for the current budget.

Here are the 2022 pay raise details for union state employees.

Here are the 2022 pay raise details for union non-state employees (SEIU homeworkers, etc.).

UPDATED (5:10 p.m.)

I missed a couple of columns this morning. The GFS pay raise increase is $256 million and total increase $462 million.

Additional Information
The case for a Washington sales tax cut (video)