Inside Olympia: Legislature Reaches Budget Agreement

April 24, 2021

Today, the Washington State Legislature reached an agreement and unveiled the $59 billion operating budget for the 2021-23 biennial budget. This is a positive sign that the 2021 legislative session may conclude on time tomorrow. The budget is very positive for hospitals and health care. It continues the spending priorities we saw earlier in House and Senate proposals – including funding priorities in public health, the COVID-19 pandemic, behavioral health and a broad array of social programs. WSHA’s budget requests for difficult to discharge, behavioral health and post-partum Medicaid coverage were fully funded.

The Big Budget Picture

Legislators have commented that this was one of the most complex budgets to pull together given the lack of in-person negotiations as well as significant federal funding that our state received from Congress. This includes a total of $4.3 billion in the Coronavirus State Fiscal Recovery Fund. The funds must be used by Dec. 31, 2024, and allowable uses include responding to the pandemic. This is defined broadly, including economic impacts, providing premium pay, replacing lost revenue (compared to fiscal year 2019), and investments in water, sewer, and broadband infrastructure. The funds can’t be used for pensions or to reduce taxes. The budget uses all but $1.1 billion of these federal funds, which will remain in reserve, subject to appropriations by the Legislature.

The budget also assumes $415 million in capital gains tax revenue. This is from the newly passed Senate Bill 5096, which as of Jan. 1, 2022, creates a new 7% tax on the sale of long-term capital assets. (Note it excludes the first $250,000 of capital gains each year, and also excludes the sales of certain assets such as real estate, family businesses and retirement assets). The bill, as agreed to by a conference committee, still needs to be passed by the Senate and House.

Budget Highlights

Difficult to discharge

  • WSHA is very pleased our budget requests from the 2020 and 2021 legislative sessions for specialty dementia were fully funded. This includes $2.3 million state ($5.25 million total) for a $60-a-day add on payment specific to 120 patients in acute care hospitals and $2.4 million state ($5.99 million total) for a general rate increase.
  • The budget also makes significant investments to decreasing the challenge with difficult-to-discharge patients including:
    • $7.9 million for 20 long-term care slots for individuals discharging from acute care hospitals who are ineligible for Medicaid due to citizenship status.
    • $22.3 million state ($46.2 million total) for the Transitional Care Center of Seattle, a DSHS-owned nursing home for difficult-to-place patients transitioning from acute care hospitals.
    • $7 million state ($14.6 million total) to support transitioning patients from state and community psychiatric hospitals to community settings, including specialized dementia and enhanced adult residential care placements.
    • $25.9 million state ($26.3 million total) to support increased personal care for clients whose need is due to psychiatric disability. This funding helps address gaps between DSHS and HCA patients.

COVID-19 Response and Other Health Care

  • $1.1 billion federal for vaccine deployment, recruitment of public health workers, contact tracing and testing
  • $147 million state for foundational public health services
  • $46 million total for primary care provider rate increase
  • $35 million federal for uninsured and underinsured care through rural health centers, federally qualified health centers and free clinics

Behavioral Health

  • WSHA is very pleased the budget includes proviso language that establishes a feasible and sustainable rate methodology for hospitals caring for long-term civil commitment patients. This reflects a multi-year effort by WSHA and our hospital members. The Legislature also appropriates sufficient funds ($100 million state) to support this rate methodology for the upcoming biennium.
  • $130 million total to expand substance use disorder services and supports (including outreach, treatment and recovery)
  • $39 million total for behavioral health mobile crisis teams for children and adults
  • $62 million total to support a 2% rate increase for Medicaid and non-Medicaid behavioral health services.
  • $7 million total to help transition civil commitment patients in state and local psychiatric hospitals to community settings, including specialized dementia and enhanced adult residential care placements.

Read our full budget details document for more information.

Final 2021-23 Capital Budget Released

On Thursday, the Legislature also took the opportunity to release its 2021-23 capital budget. This budget reflects the robust investments proposed by both the House and Senate. The final budget funds a variety of projects, including behavioral health, broadband access and infrastructure, affordable housing, early learning, and the environment.

Some highlights in the final capital budget are:

Behavioral Health

  • $71.4 million state for competitive grants to expand community-based behavioral health services. This includes $18 million for hospitals (excluding IMD facilities) and freestanding evaluation and treatment facilities to increase bed capacity for patients on 90- and 180-day civil commitment orders
  • $23.8 million state for community-based behavioral health projects. This includes crisis diversion, secure detox and adolescent services
  • $132.5 million state for a range of behavioral health state facilities, such as a new forensic hospital at Western State Hospital, a 48-bed facility in Clark County, and a 16-bed facility in Maple Lane, along with capital improvements to existing state facilities
  • $201 million state to support the construction of the new behavioral health teaching hospital at the University of Washington


  • $411 million total for grants and loans to expand broadband access to unserved and under-served communities in the state


  • $5 million state for planning, technical assistance and predesign grants for communities historically underrepresented by the capital grant program
  • $13.6 million state for 13 projects that serve populations that have been historically underrepresented


Contact Us

Washington State Hospital Association
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Suite 1400
Seattle, WA 98104

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206.283.6122 fax

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