Paying for the Last Link: A Six-Part Series on Housing Finance in Washington, Part 6 of 6

This series has argued that Washington can find people who need housing but too often cannot provide the last link in the chain of care I described in July: a home. The state funds buildings far more reliably than it helps households with the lowest incomes pay rent, and the previous two articles proposed five ways to close that gap. Most of those proposals will not last unless lawmakers protect the money behind them when budgets tighten.

Washington should make ongoing rent assistance a protected priority in its budget and pay for it with revenue built to last: a dedicated rental assistance account with a reserve, funded by a protected appropriation and dedicated tax revenue. Three facts support that case: the state already spends on homelessness with limited results, its current homelessness revenue rises and falls with the housing market, and every available source carries risks that a combination can manage better than any single source.

Housing Has Earned a Place Among Protected Priorities

Washington faces another difficult budget. In 2025, lawmakers closed a shortfall estimated at $12 billion to $16 billion with new revenue and spending cuts, and the gap has not gone away. The June 2026 forecast cut nearly $1 billion from the revenue the state expected in February because the economy has slowed, and state budget officials expect a larger shortfall for 2027–29. The September forecast left the overall picture largely unchanged, and most of the change it projects for later years comes from the new tax on income above $1 million, which voters may repeal in November.

Housing competes with education, health care, child care, and public safety for every dollar. The state constitution (Article IX, Section 1) calls “ample provision for the education of all children” the state’s “paramount duty,” so housing cannot outrank that obligation. Housing does, however, belong among the priorities the state protects from cuts, for four reasons.

First, Washington already spends heavily on homelessness and gets limited results. According to the 2025 annual report on homelessness from the Washington State Department of Commerce (Commerce), homeless housing projects in Washington spent about $967 million from all public and private sources in state fiscal year 2025 (the sum of the rows in the report’s expenditure table), including about $318 million on shelters. Yet in the shelters funded by the state’s Consolidated Homeless Grant, only 14% of households that left moved into stable housing. By Commerce’s measure, prevention cost about $10,000 for each household that ended up stably housed, compared with about $53,000 for shelter. The figures are not directly comparable because the two programs serve different households, and some households that received prevention help might have kept their homes without it. Still, the size of the gap makes the case: protecting rent assistance can get better results from money the state already spends.

Second, cutting housing funding shifts costs to other public services rather than eliminating them. Some people without stable housing, especially people experiencing chronic homelessness, make heavy use of emergency rooms, detox centers, jails, and crisis services. Housing can be worth more than it costs: a 2022 systematic economic review for the Community Guide found that Housing First programs in the United States returned about $1.80 in benefits for every $1 spent. In Denver, the 2021 final report on a randomized trial of supportive housing for people who cycled between the street and jail found fewer arrests and jail stays, and a 2024 analysis of the same trial found six fewer emergency department visits per participant over two years. Reduced spending on other public services paid back roughly half the cost of that housing, between 44% and 57% depending on the provider. However, a 2018 National Academies review cautioned policymakers not to expect supportive housing to save more than it costs, although some studies of programs serving the heaviest users of emergency services have found savings.

Third, the need for help is rising just as support is shrinking. Federal funding for Emergency Housing Vouchers ran short this year, and households using them faced months of uncertainty until a stopgap law made them eligible for replacement vouchers, as Parts 2 and 3 described. The Health Care Authority estimates that federal Medicaid changes could cost between 200,000 and 320,000 residents their coverage. Commerce’s report warns that Apple Health and Homes, which pairs housing with Medicaid-funded supportive services, will likely lose capacity as eligibility tightens, work requirements begin, and state funding falls, unless state or federal policy changes. As that support pulls back, either the state and counties will pick up more of the cost or people will go without the help that keeps them housed. Meanwhile, eviction filings in Washington reached an all-time high in 2024, according to Commerce’s report, and Office of Civil Legal Aid data show they set another record in 2025.

Fourth, the state needs to protect what it has already bought. Washington put $605 million into the Housing Trust Fund for 2025–27 and added $123 million in 2026. Rents paid by households with the lowest incomes rarely cover a building’s operating costs, so without ongoing rent or operating assistance, the homes the state paid to build may struggle to stay in good repair or serve the households they were built for. Public ownership alone does not protect that investment, as Part 3 described: federal public housing deteriorated for decades, in large part because federal funding for its operation and repair fell chronically short. Rent assistance keeps the state’s capital investment working.

Washington’s Current Funding Cannot Carry the Load

Washington’s dedicated homelessness revenue depends on the housing market. According to Commerce’s report, collections from the document recording fee have stagnated as the number of recorded documents has fallen. Because that revenue rises and falls with home sales, the state cannot count on it when the economy weakens and more households need help. Washington has considered larger housing investments before, but a proposed $4 billion housing bond, which would have paid for projects rather than ongoing rent, never advanced in 2023.

Colorado shows that dedicated funding solves only half the problem. In 2022, Colorado voters approved Proposition 123 to set aside one-tenth of one percent of state taxable income, roughly $300 million a year, for affordable housing, and the program had helped create or preserve more than 3,000 units by early 2025. Yet after a 2025 special session cleared the way for the governor to propose cutting the fund to close a budget gap, lawmakers in 2026 moved $130 million from the housing fund to the state’s general fund. Washington’s experience shows the risk of revenue tied to the housing market. Colorado’s shows the risk of dedicated revenue whose own terms let lawmakers cut it when state revenue falls short, and a durable approach has to avoid both.

How Washington Should Pay for It

Money for ongoing rent assistance has to pass three tests: hold up in a downturn, grow as rents grow, and resist diversion. Most state programs fail at least one: a national analysis found that 60% of state-funded rental assistance programs rely on general revenue, “often on a one-time or inconsistent basis,” and that less than one-fifth have “a stable, dedicated revenue source, such as a real estate transfer or millionaire tax.” Each of Washington’s four realistic options passes some tests but not others.

A dedicated account backed by a protected appropriation. The Legislature could create a statewide rental assistance account, set a funding level in statute for each budget, and pair it with a reserve. The account would not depend on home sales, and the reserve could carry the program through a short downturn. Its weakness is that the appropriation draws on the same general fund that shrinks in a downturn, and a later Legislature can cut the appropriation or redirect the reserve, as Colorado did with its housing fund.
A share of the new tax on income above $1 million. Washington’s 9.9% tax on income above $1 million takes effect January 1, 2028. The law directs its revenue to tax relief, school meals, child care, and other priorities but dedicates none of it to housing. A dedicated share for rent assistance would not depend on home sales and could grow over time. Its weaknesses are uncertainty and volatility: the tax faces a constitutional lawsuit and a repeal initiative, I-645, on the November 3, 2026, ballot, and high earners’ income can swing with financial markets. It would also be slow and contested: payments would not begin until 2029, and a share for housing would mean redirecting revenue the law already commits to other priorities.
A higher real estate excise tax on the most expensive sales. In 2024, a House bill proposed an additional 1% tax on the portion of a sale above $3.025 million. The bill would have sent an estimated $130 million or more a year to the Housing Trust Fund, Apple Health and Homes, housing for people with developmental disabilities, and operating costs for low-income housing. It cleared the House Finance Committee 7–6 before stalling. It would apply only to the most expensive sales, but like the existing recording fee, it would rise and fall with home sales.
Regional and local sales taxes. Minnesota law requires a 0.25% sales tax in the Twin Cities metro area that sends 25% of its revenue to state rental assistance and the rest to metro cities and counties. Washington already lets counties, and in some cases cities, impose a 0.1% sales tax for housing and behavioral health, and they may spend up to 40% of it on rental assistance, housing services, or behavioral health programs. Counties and cities that acted by 2020 also receive a share of state sales tax for affordable and supportive housing, which can pay for rental assistance until it expires 20 years after each jurisdiction began collecting it. Local taxes add money close to the need, but they raise the least where the tax base is smallest, so they cannot replace a statewide source.

Medicaid can supplement these sources but cannot replace them. Washington’s Medicaid program pays up to six months of back rent for a narrow group of supportive housing enrollees, and only through June 2028.

No single source passes all three tests, so Washington should combine them. The state should build the statewide voucher proposed in Part 5 on a dedicated account with a reserve, funded by a protected appropriation. It should add a dedicated share of either the tax on income above $1 million or a higher real estate excise tax on the most expensive sales, while counties use the tools they already have. As I argued in my July piece, no single source should be able to switch the system off, and this combination meets that standard: the reserve helps carry the program through a short downturn, the dedicated tax share allows funding to grow, and losing one source would not end the program.

The risks are real, though. Lawmakers can still cut an appropriation, voters may repeal the tax on income above $1 million, and a real estate tax would swing with the market. Washington can manage those risks by writing protections against diversion into law, limiting the reserve to rent assistance, and drawing on more than one source, because, as Colorado shows, dedicating a fund is not enough on its own. A later Legislature could still change those protections, but putting them in law raises the political cost of a cut. With those safeguards, the benefits outweigh the risks.

Putting It Together

The proposals in this series work best as a package.

Homes for households with the lowest incomes: when the state funds new homes for households below 30% of area median income, it should also commit the rent or operating assistance those households need, through a statewide voucher funded from the sources described above.
Capital that goes further: fund the revolving loan program for projects serving households at 50% to 80% of area median income, so more grants can go to homes for people with the lowest incomes.
Housing that already exists: give local governments a right to match offers on affordable apartment buildings, with preservation financing behind that right.
Pilots: test predictive outreach and direct cash assistance at a scale the state can serve and evaluate.
Evaluation: design the evaluation from the start with tenants, people who have experienced homelessness, providers, developers, local governments, and Tribes, and measure outcomes and quality, not just units and households served.

These proposals also advance Commerce’s 2024–2029 State Homeless Housing Strategic Plan, including its goals for stable housing, prevention, and accountability and its call for predictable, inflation-adjusted funding. Three supporting steps would help the package work. The state should put prevention and legal aid first for tenants facing eviction, starting with the strategic plan’s commitment to coordinate trainings with the Office of Civil Legal Aid, work that is still waiting on staff. It should pair every new shelter bed with a plan for the permanent housing people will move into. Finally, state agencies, managed care organizations, and housing providers should prepare for more Medicaid coverage losses like those that began on October 1, when about 11,000 residents were projected to lose coverage.

The statewide voucher is the most expensive proposal and needs protected funding because its cost recurs. The other proposals cost less: a right to buy is mainly a legal change backed by preservation money, and a revolving loan fund needs a substantial appropriation up front but lends repaid money again. Every program also needs money to run it, and Commerce’s annual report shows that several parts of the state plan, including trainings with sister agencies and the coordinated entry prioritization tool, are waiting on staff. Lawmakers should fund that work as infrastructure rather than overhead.

The Bottom Line

Washington has spent years building the systems to find people who need housing and the laws to make housing easier to build. The missing piece is money that reaches the people with the lowest incomes and keeps reaching them when the budget tightens. The task force planning a new state Department of Housing reports to the Governor and Legislature by November 15, 2026, ahead of the 2027 legislative session. If the new department inherits this work without stable funding, it will carry the same gap forward. The 2027 session is the time to protect rent assistance in the budget.

In health care, we have learned that coordination without delivery is an expensive way to document unmet need, and the same is true of housing.