Real state and local government taxation per resident in Washington has climbed roughly 44% since 2004, according to a new analysis published by the Washington Policy Center this week. The report challenges recent claims by Superintendent of Public Instruction Chris Reykdal that the state's budget problems stem from its tax structure rather than spending growth. Using the state's own employment, budget, and revenue data, the analysis argues that government has become substantially more expensive for taxpayers over the past two decades, even as it declined relative to the state's booming economy.
The state employed 106,769 people in fiscal 2005 and 138,109 in 2025, a 29% increase that closely tracked Washington's roughly 30% population growth, working out to about 17 state employees per 1,000 residents in both years, according to the report. The ratio dipped to about 15.5 after the Great Recession before gradually climbing back, and in 2025 alone the workforce grew 3.6% while population grew about 1%. State spending declined as a share of GDP because Washington's economy expanded dramatically, from about $293 billion in 2005 to roughly $895 billion in 2025, driven in part by rapid growth in the technology sector, which now accounts for roughly $160 billion in annual output. The state's wage bill grew from roughly $5 billion in 2004 to nearly $13 billion in 2025, an increase of about 150%, while population growth and inflation together would account for roughly 125% growth over the same period, leaving about $1.2 billion in additional annual wages beyond what those factors alone would explain.
The report finds that measuring government against GDP "implicitly treats faster economic growth as evidence that government has become relatively smaller, even if the cost borne by taxpayers continues to rise." The analysis notes that government became more expensive for taxpayers even as it declined relative to GDP because the technology boom made the denominator grow faster, not government smaller. The authors write that the largest increase in the 2025 operating budget went to employee compensation, about $3 billion, more than everything the budget cut combined, and lawmakers then approved roughly $9 billion in new taxes to help finance those raises and other policy choices.
The report explains that government services rely heavily on labor—teachers, nurses, troopers, and caseworkers—making it far easier for a technology company to double its output than for a caseworker to become twice as productive. Even if government spending grows steadily, a technology-driven economy can outpace it, causing spending as a share of GDP to fall almost automatically, the analysis says. The report also notes that the comparison between public and private wages relies on averages heavily influenced by a relatively small number of exceptionally high earners, with Washington's average annual wage exceeding $95,000 in 2024 while the median worker earns closer to $63,000, and in 23 of the state's 39 counties the average wage remains below $60,000. These comparisons miss the question taxpayers ultimately care about—what government costs relative to the people paying for it, the authors argue.
Current revenue projections indicate the 2027–29 operating budget can grow by just 2.5% over current spending across the biennium, the slowest projected growth outside the Great Recession, while inflation alone is expected to rise several times faster, the report notes. Those projections also assume the state's new income tax remains in place. The Office of Financial Management warned agency directors to prepare for "significant budget shortfalls" and said business as usual was over, warnings that come despite record tax increases. The report's conclusion: Washington's budget challenges stem from spending growth that has outpaced the taxpayers supporting it, not from an inadequate tax structure.