Takeaways

• Delivering programs and services that make life easier and more affordable is one of the primary purposes of state government.
• Washington pays for many key state programs that reduce costs for millions of people through an account of state tax revenue known as the general fund.
• Guardrails on how general fund money is spent help ensure that Washington provides ongoing essential services while also responding to evolving needs.
• Growing the general fund with progressive taxes, like the Millionaires Tax, allows our state government to sustain and expand affordability programs, while also beginning to rebalance the inequities baked into our upside-down tax system that lets those with the most resources contribute the least.

The Millionaires Tax is a major affordability win from Washington’s 2026 legislative session. This tax on annual income over $1 million will be paid by less than 1% of Washington households and will bring in approximately $3 billion in state revenue per year over the next decade. Much of the revenue from the Millionaires Tax will go toward specific programs and tax cuts that make life more affordable for families, working people, and businesses across the state. The remaining funds — more than half of what the tax is expected to bring in — will go into the state’s general fund.

So why should Washingtonians want to see more tax revenue going into the general fund? The general fund is our state’s affordability workhorse — the primary source of money for our most essential public services that help reduce costs for millions of us. While health care, child care, and higher education costs continue to outpace what most of us can afford, the general fund is the central mechanism for providing public services that meet these basic needs at low or no cost. By putting more dollars into the general fund, the Millionaires Tax doesn’t just support working people and families through tax relief — it also directly funds affordability programs that we rely on.

What is the general fund?

Every two years, our legislature and governor build a budget that covers the next two years of state spending. The current budget spans July 1, 2025, through June 30, 2027, and is approximately $185 billion. Budgets include separate components for transportation projects, capital expenses (like buying and maintaining public schools and parks), and operations. The $150 billion operating budget represents all the money spent to carry out core functions of state government like health care, education, and social services.

The operating budget is primarily funded with federal dollars, higher education tuition, and state taxes – namely, taxes on sales, property, and businesses. Some of the revenue from these taxes goes into specific accounts, but much of it, currently around $78 billion, goes into the general fund. In short, the general fund is an account that holds revenue from state taxes and pays for over half the operating costs of running state programs.

How Washington uses the general fund: mandated and flexible spending

A common misconception about the general fund is that there are no constraints on how this money is spent. However, Washington’s government is legally required to pay for public services like K-12 education, Medicaid, the Working Families Tax Credit, courts, and pensions — around 65% of general fund dollars are used to pay for these programs. Mandated spending from the general fund saves Washingtonians money every day:

• Health care: $29 billion from the general fund is allocated for Apple Health (Washington’s Medicaid program) in the current 2025-27 budget to fund health services for low-income people. Nearly 2 million Washingtonians, or about 1 in 4, are enrolled in Apple Health, saving thousands of dollars each year on premiums and out-of-pocket costs.
• K-12 education: Over $31 billion of general fund dollars are going toward public schools in the current budget. Compared to paying private school tuition, Washington families save an average of $16,000 for each child attending a public school every year.

The remainder — approximately 35% — of the general fund can be spent in different ways over time, though much of this money is used to fund long-standing programs like higher education, child care, early education, public health, and state parks. Money from the general fund for these programs cuts costs even further for people across the state:

• Higher education: The Washington College Grant program provides tuition support for over 100,000 low- and middle-income Washingtonians each year to pursue higher education and career or technical training. Over $550 million is allocated from the general fund for student financial aid in the current budget. A student from a family of four earning up to $78.5k per year is eligible for a maximum of nearly $13,000 in tuition grants per year.
• Child care: Washington’s Department of Children, Youth, and Families administers a child care subsidy program for low-income families called Working Connections Child Care (WCCC). The current budget includes over $350 million from the general fund for this program. A low-income parent of a toddler in Seattle receiving WCCC subsidies saves over $28,000 on child care every year – a 93% cost reduction.
• Early education: $260 million is allocated from the general fund to pay for over 14,000 children to participate in Washington’s Early Childhood Education and Assistance Program. This program provides free pre-kindergarten services, including education, nutrition, and family services, for low-income households across the state.

The flexibility of the general fund allows our state spending to meet the moment and adapt to changing circumstances and needs, like those presented by the COVID-19 pandemic and recent federal funding cuts to SNAP.

• Emergency response: As Washingtonians faced job loss, schooling disruptions, and health threats in the early days of the COVID-19 pandemic, the need for public programs grew practically overnight. Our lawmakers responded by allocating $25 million from the general fund in 2020 to expand the state’s ability to provide essential services. Along with federal grants, these funds allowed Washington to ramp up public services like food and rental assistance, behavioral health programming, and small business relief to help people across the state stay afloat during an economic crisis.
• Backfilling federal cuts: The federal government shutdown in November 2025 suspended SNAP benefits for nearly 1 million Washingtonians. In response, the state directed over $2 million from the general fund (plus additional money from other accounts) to local food banks to address the increased need for food support. Though SNAP benefits have been reinstated, federal policies are also imposing additional costs on Washington state to administer the SNAP program. To compensate, lawmakers decided to supplement the current budget with an extra $21 million from the general fund to protect SNAP access for the many Washingtonians who rely on this program to afford food.

Despite the benefits of being able to adapt state spending alongside shifting priorities, the constraints on how the general fund is used explain why certain programs, like early education and child care, are on the chopping block most often. When budgets are tight, programs without funding requirements are the primary targets for cuts, though tens of thousands of people rely on them. These kinds of budget tradeoffs don’t need to keep happening, though: lawmakers can avoid making cuts to programs that boost affordability by generating more progressive revenue to fully and sustainably fund them.

Progressive taxation creates affordability through the general fund

Washington currently has the second-most regressive tax system in the nation, in which the lowest-income households pay the greatest share of their income in state and local taxes, while those with the most resources contribute the least. In addition to being deeply inequitable, this tax system sets the state up for recurring budget deficits and painful program cuts because our primary sources of revenue (sales and property taxes) to pay for the public programs we need don’t keep up with economic growth. Washington’s antiquated tax code permits people and corporations to amass wealth without paying what they owe to support the public services we all benefit from. While money disproportionately accumulates among the wealthy few, lawmakers divvy up limited public funds each year between many essential public programs, but it doesn’t have to be this way.

Funding public programs with progressive taxes is both equitable and the only way to ensure that our state has sufficient resources to fulfill its purpose of delivering essential affordability solutions to everyone who needs them. The Millionaires Tax is an early step toward building a more balanced tax system in which everyone contributes proportionally to their means. By increasing the size of the general fund alongside other targeted investments, the Millionaires Tax will allow our state government to sustain and expand the many programs that help make Washington a more affordable place to live.