Washington’s biennial revenue reaches $80 billion in tax debate

By Nathan Brooks

Washington’s biennial revenue budget has climbed from roughly $26 billion in 2010 to about $80 billion, Madrona managing director Matt McIlwain said.

In a MyNorthwest segment of “The Jake and Spike Show” published Oct. 31, 2026, McIlwain urged voters to support Initiative 645 and repeal Washington’s income tax. His case was that Washington should rein in spending rather than use an income tax as its answer.

“We really have a spending problem in the state,” McIlwain said. “We don’t have a revenue problem.”

What does a “yes” vote change for Washington?

McIlwain is asking voters to approve Initiative 645, which MyNorthwest described as a repeal of the income tax. For employers and investors, the immediate choice is whether Washington keeps the tax as a revenue source or addresses education and health-care funding through spending restraint.

McIlwain framed that choice around economic opportunity. He said entrepreneurs from different backgrounds deserve access to capital and a chance to build businesses, while an income tax would discourage the risk-taking that creates jobs and new products.

He also argued that Washington’s existing taxes have generated substantial revenue while encouraging investment and job creation. McIlwain credited the state’s investment-driven economy, sales taxes and the business and occupation tax with financing public services.

The revenue test

McIlwain contrasted his position with warnings made before Washington voters rejected a state income tax in 2010. He said those warnings predicted that the state would never generate enough revenue to fund education and health care without an income tax.

“And by the way, the fear-mongering that was put out back in 2010 was, if we don’t have an income tax, we’re never going to have enough tax revenue to fund education and healthcare,” McIlwain said.

On a simple two-year annualization, McIlwain’s figures equal roughly $40 billion a year today, compared with about $13 billion in 2010. He said the growth came without an income tax and alongside the state’s existing tax system.

The spending test

KIRO host Spike O’Neill challenged how Washington could reject the income tax while resolving continued education and health-care funding concerns. “How do you solve this deficit?” he asked.

McIlwain said the state should examine spending and the outcomes it produces. He said Washington’s annual spending per student rose from a little more than $10,000 in 2010 to more than $20,000 today.

McIlwain argued that increased funding should come with greater accountability for educational results. He said taxpayers receive little value when additional resources remain tied up in government and administered less effectively.

Spike pressed McIlwain to identify specific reductions rather than treat school spending as a single target. “You can’t cut the cost of maintaining schools. You can’t cut the cost of utilities to keep schools open. You can’t pay teachers less because you got to be competitive to get the best teachers. Where do you cut?” he asked.

McIlwain identified administrative staffing as an area to scrutinize. He argued for directing more money into classrooms and using technology to support learning, including tools that could provide more personalized instruction.

What Seattle’s schools show

KIRO host Jake Skorheim backed McIlwain’s repeal argument and cited Seattle Public Schools figures as evidence of spending growth disconnected from enrollment. He cited:

• A budget of $611 million in 2014 and nearly $1.2 billion in 2025.
• Enrollment of 48,529 students in 2014 and 48,570 in 2025.
• About 1,000 additional staff members.

“It’s a 0% increase in students. It’s a 96% increase in budget,” Jake said.

McIlwain connected those figures to taxpayer frustration. “They’re also disappointed with the results that they’ve gotten for being taxed more and having more resources tied up in the government, being, you know, administered less effectively,” he said.

The tax-expansion risk

McIlwain also predicted that an income tax initially aimed at wealthy residents would eventually reach a broader share of Washington households. MyNorthwest noted that the interview did not establish that such an expansion would occur.

Jake explicitly endorsed McIlwain’s recommendation. “I really do hope that people vote yes to repeal this,” he said.

Spike closed by encouraging listeners to read McIlwain’s GeekWire opinion piece, which also discusses potential effects on philanthropic donations. “I recommend people go read this thing,” he said.

The full discussion appeared on “The Jake and Spike Show,” which airs weekdays from noon to 3 p.m. on KIRO Newsradio 97.3.

For businesses, the campaign turns on a direct trade-off: retain an income tax McIlwain says can deter risk-taking, or repeal it and require Washington to find savings elsewhere. If voters approve Initiative 645, the next test is whether officials can identify specific reductions without cutting school maintenance, utilities or teacher compensation.