WA climate funds needed to plug huge budget gap, lawmaker says

Lawmakers can’t find a better way to fill part of Washington’s perennial budget gap than by dipping into the billions raised by the state’s Climate Commitment Act.

Many had hoped to avoid tapping into the dedicated climate account for general-fund obligations, but as the budget deadline approaches alongside the end of the short legislative session early next month, they weren’t able to find any viable alternatives.

Gov. Bob Ferguson’s $559 million proposal to transfer climate funds is legal but also a significant disappointment for those who hoped to safeguard that cash as a way to transition away from planet-warming fossil fuels or to guard against natural disasters, especially as the federal government hastens its retreat on climate change policy.

Not only does tapping into the climate fund set a dangerous precedent but it also amounts to a breach of faith with voters who mobilized for the policy back in 2024, said former Democratic state Sen. Reuven Carlyle, largely seen as the chief architect of the CCA.

“The moment you sweep those funds out for nonclimate or sustainable investments, it becomes easier to do it the next time,” Carlyle said.

Voters would notice, too, as a dedicated fund turned into something more closely resembling a piggy bank,” said former Gov. Jay Inslee, for whose administration the CCA is regarded as a keystone achievement.

Sure enough, some current lawmakers agree with the sentiment and came out against the proposal. But try as they might, they weren’t able to think of another way to fund the state’s working families tax credits.

The budget gap is just too wide for any alternative, said state Rep. Joe Fitzgibbon, D-West Seattle. So the plan now, the House majority leader said, is for the chamber to propose a budget that does tap into the climate fund for $559 million and in the next budget cycle to try and repay the account.

Whether Ferguson will support the repayment plan remains unclear. Representatives for the governor did not respond to requests for comment.

A short-lived dogfight

Politics surrounding Ferguson’s proposal spilled into the streets last month, pitting the governor against Fitzgibbon, his predecessor - Inslee - alongside Carlyle and others.

Those who crafted the Climate Commitment Act, which has so far raised some $4.3 billion from the state’s biggest polluters of greenhouse gases, understood others might come for the money. They set it aside specifically for work to reduce emissions and help recover from or guard against climate disasters.

The need for this work has become even more pronounced in the last few months as a series of devastating floods swept over Washington and then President Donald Trump’s administration repealed a key tool for federal officials to regulate emissions.

But within the CCA is language that allows Ferguson or lawmakers to dip into the funds for working families tax credits, which offer rebates to low-income taxpayers.

The governor defended his proposal as a legitimate strategy to help bridge the state’s $2.3 billion budget shortfall. Others, however, said the move will violate the trust of the electorate.

Shortly after Washington launched its carbon market, a right-wing effort to repeal the policy began. A broad coalition of environmental players, businesses and politicians banded together to protect the CCA in the 2024 election. Ultimately the repeal effort failed with nearly 62% of voters backing the climate policy.

A large chunk of that coalition, more than 145 businesses, reformed last month and sent Democratic lawmakers a letter, cautioning them against proposals like Ferguson’s.

To use the state’s climate funds for anything other than climate projects would break a promise made to voters during the 2024 campaign, the letter said.

This policy was sold to voters as strong climate action in an era of heightened need, Carlyle said. Using its money for the working families tax credits, though legal, runs contrary to the spirit of the law, he said.

Sure enough, some of the dedicated climate funding does go toward projects that don’t directly reduce emissions. These tax credits sit in a similar vein, one former state lawmaker argued last month. They’d alleviate pressure brought on families by rising costs.

Carlyle argued the Legislature doesn’t have to sacrifice Washington’s climate goals in the name of economic stimulus.

“Let’s not pretend for a New York second that there aren’t a lot of other, high-value categories to invest in that can accelerate decarbonization while growing our state economically,” Carlyle said.

For the time being, though, the point appears to be moot.

Lawmakers haven’t found a way to fund the tax credits any other way than with the climate funds, Fitzgibbon said.

What’s next?

Dipping into the state’s climate funds for the tax credits also sets a type of precedent. Others have lined up to tap into the account for schools or transportation needs. These types of proposals are sure to continue.

But this money won’t be around forever, Fitzgibbon said. In the coming years, the state will ratchet down the number of allowances sold in quarterly auctions, reducing the amount of money they bring in each year. So the Climate Commitment Act can’t be a long-term strategy to fix Washington’s budget woes.

In the next budget cycle, Fitzgibbon said lawmakers will propose to cash out money accumulating in its Law Enforcement Officers and Fire Fighters Retirement System to repay the $559 million taken from the climate account.

How that repayment plan works, in practice, remains to be seen. This year’s budget remains a work in progress so it’s perhaps a little early to start in on the next one.

Inslee cautioned that a willingness to repay the climate funds is by no means a guarantee. The money should be paid back, he said, but the state’s ability to convert its investment in the pension fund to cash is uncertain. He expressed disappointment in the “shell game involved with moving money around in such a manner.

The opportunity cost for Washington’s climate cash is only increasing, however. Especially as the Earth continues to warm and the state careens toward its fourth severe drought in a row.

Kelsey Nyland, spokesperson for the environmental nonprofit Clean and Prosperous, expressed disappointment in the plan to draw down Washington’s climate funds. More than 145 coalition partners had regrouped to avoid such a result. Now, however, they’re looking to protect the CCA money moving forward.

Fitzgibbon introduced a bill this month to further narrow the legal uses for Washington’s climate funds. The bill would allow for climate funds to increase funding levels for the working families tax credits but would not allow for the account to fully fund the credits like this year, he said.

The House and Senate will propose their respective budgets in the weeks ahead and reconcile the two, Fitzgibbon said. Together the two chambers will present Ferguson with a completed budget on March 11, the last day of the session.

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This story was originally published February 17, 2026 at 6:40 AM.