A new survey of Washington businesses reveals growing pessimism about the state’s economy and ability to be successful in the Evergreen state.
The survey conducted last month by the Association of Washington Business found about 24 percent of employers considering moving their business out of state, and even more are considering moving their personal residence out of Washington.
“It showed a precipitous decline in people’s confidence in Washington’s economy,” said AWB’s Vice President of Government Relations Morgan Irwin in a Wednesday interview with The Center Square.
More than 400 AWB member businesses took part in the quarterly survey.
“The reason we do a quarterly survey is so that we can show not only where we’re at in a single point in time, but we could show trends over time,” said Irwin.
“One of the things that we added to our survey in January, was ‘is a person looking to move?’ Is a business owner looking to move their personal domicile out of state?”
In Spokane County, a short drive from the Idaho border, 67% of respondents said they were considering moving their personal residence to another state.
Irwin said comparing even Q1 of this year versus where we are today in Q2, the survey found “increases in everything you don’t want to increase and decreases in everything you do want to increase.”
“Are you confident in our economy? That number has dropped. Are you planning to expand your business? That number dropped. Are you planning to move your business out of state? That number increased.”
“Are you planning to move your personal domicile out of state? That went from 45% in January up to 55% three months later,” Irwin added.
Key findings in AWB report
72% of respondents rate Washington’s overall tax burden as a top business challenge, up from 64% last quarter and up 18 points since winter 20257% rate Washington’s economy as strong or very strong, down from 10% last quarter and down 16 points since winter 202522% say their business is growing, up slightly from last quarter but down 5 points since winter 20259% plan to expand in Washington in the next year, down from 20% in winter 2025, while 38% are planning to expand in another state, up from 21% in winter 202546% expect a recession in the next year, up from 34% last quarter and up 29 points since winter 2025
“So, it’s really, really, really troubling data,” Irwin said. “It is not, ‘everyone’s leaving and close up the economy’…..but it is a very troubling trend that’s going in the wrong direction in terms of having an economically vital Washington state.”
Irwin said the recently passed income tax is having an impact on businesses and business owners deciding to stay in Washington.
“A lot of things have happened, but the biggest one is that we passed an income tax. So, I’m not saying that 100% of that additional 10% and people planning to move their domicile out of state is about the income tax, but when we take a look around at the things that passed between now and then, that’s a pretty big driver,” Irwin said.
Survey questioned
An advocacy group that backed the income tax is taking issue with AWB’s survey results.
“Actual data from across the U.S. show that state taxes do not cause moves by wealthy households,” noted a press release emailed to The Center Square by Invest in WA Now.
“As one economist recently told the New York Times about the wealth flight boogeyman: ‘It is largely indeed a myth, and it’s more than that – it’s frankly almost propaganda."”
“After the capital gains tax, WA gained more millionaires, not less,” the release states. The group says the “millionaire class” grew by 46.9% in Washington despite the state’s first ever capital gains tax.
Top concerns for AWB members
“Taxes are number one. Healthcare costs are number two. Then it’s the regulatory environment,” Irwin said.
“Number four is the cost of fuel. That one really jumped. I think that some of that is from cost drivers that are happening outside of Washington State. But certainly, a large portion of that is directly laid at the feet of CCA.”
The Climate Commitment Act adds another about 52 to 58 cents to every gallon of gas in Washington, according to policy experts. Add that to the 55.4-cent excise tax, and the state tax burden per gallon is over $1.10.
Average price for unleaded fuel in Washington Thursday is $5.76, up from $4.26 one year ago. Diesel fuel averages $6.84 per gallon, up from $4.45 one year ago.
“It’s just not a super bright economic outlook right now,” Irwin said. “It’s an extremely difficult place to do business.”
