Key Points
- Rachel Smith highlights rising costs challenge.
- Taxes top concern after historic state increase.
- Small businesses struggle to stay in Washington.
- Budget decisions impact jobs and economy growth.
- Leaders urge sustainable fiscal policies now.
Washington (Evening Washington News) February 18, 2026 - Rachel Smith, President of the Washington Roundtable, has pinpointed escalating costs, particularly driven by taxes and regulations, as the paramount challenge confronting businesses in Washington state amid the intensifying economic pressures of 2026.
Who leads the Washington Roundtable?
Rachel Smith assumed the presidency of the Washington Roundtable in August 2025, bringing over two decades of experience in government affairs and advocacy. As detailed in a Seattle Metro News article from August 21, 2025, former Chair Maureen Sandler praised her as “a highly respected advocate for Washington’s businesses at a time when the state is facing strong economic headwinds.”
Smith's background includes roles as deputy county executive and chief of staff to King County Executive Dow Constantine, positions at Sound Transit, and in the administration of former Seattle Mayor Greg Nickels.
In her new role, she has focused on policies that bolster economic competitiveness, stating upon appointment “It is an honor to step into this new role with the Roundtable... we work together to avoid actions that undermine our economic competitiveness, including policies that disincentivize job growth or make it more expensive to start or grow a business.”
The Washington Roundtable, founded in 1983, comprises senior executives from major private sector employers dedicated to influencing public policy on economic vitality, education, and infrastructure. Its 2025 Policy Agenda, released late last year, prioritises clean energy innovation and transportation investments, but Smith's recent statements pivot sharply to immediate cost pressures.
Smith's selection was announced on August 20, 2025, with the organisation citing her strategic leadership across sectors. During her tenure at the Seattle Metro Chamber, she expanded membership and launched initiatives like The Index survey on voter priorities. Her work on pandemic-related vaccine verification earned national acclaim, positioning her to tackle 2026's fiscal challenges effectively.
How have taxes impacted Washington businesses?
A fall 2025 survey by the Association of Washington Business, released on November 13, 2025, revealed that 65% of employers now cite taxes as their top concern, up from 58% the previous summer. As reported by Yahoo Finance staff, 76% reported the most recent increase had a direct impact on business. This follows the state Legislature's passage of a record $9.4 billion tax package in early 2025, including hikes to the Business and Occupation (B&O) tax, sales tax, and new levies on sectors like payment processing and self-storage.
Kris Johnson commented on the survey results, stating “Washington is becoming increasingly unaffordable for both businesses and families, and this is evident in the results of our survey.”
More than half of respondents (52%) are passing these costs to customers, while 42% absorb them internally, exacerbating inflation concerns cited by 47% of businesses.
The Chronicle staff reported on November 14, 2025, that conditions have worsened year-over-year: the share viewing the state economy as weak rose from 17% to 28%, business downturns from 17% to 27%, and expansion plans in Washington dropped from 23% to 14%. Small business owner Nikhil Singhal told FOX 13 he was forced to shut down due to these tax hikes, illustrating real-world fallout.
What specific tax changes occurred?
Legislation signed by the governor on May 20, 2025, introduced sweeping reforms, as outlined in a Ballard Spahr alert. Key measures included new B&O tax classifications for payment card processing (HB 2020), elimination of certain exemptions for credit unions merging with banks, and taxing self-service storage rentals at 1.2%. Additional bills targeted electric vehicle credits, luxury items (HB 2077, ESSB 5801), and proposed wealth taxes on assets over $50 million.
In the December 23 joint statement, Joe Fain, President & CEO of the Bellevue Chamber of Commerce, urged “sustainable budget practices for the long-term... everyone wants to get better outcomes for our communities.”
He stressed avoiding lurching from one budget crisis to another.
Small business owner Gea Bassett of Green Cleaning Seattle shared “Our business is paying more in state taxes every year, yet nothing seems to be getting easier or better. The strain is increasing.”
During AWB's ninth annual Manufacturing Week bus tour in October 2025, Kris Johnson identified taxes, trade, and overregulation as top threats.
He noted “Once a state gets a reputation as unfavourable to business, that can be hard to shake,” with 40% of jobs tied to international trade facing tariff uncertainties.
Why are small businesses particularly affected?
Rachel Smith's focus on small businesses aligns with data showing Washington ranks poorly for affordability and survivability. The state's economist has warned of flat job growth and private sector cuts post-tax hikes. AWB represents firms where 90% employ fewer than 100 people, over half under 10, amplifying the vulnerability.
Examples abound: an engineering firm faces $300,000-$400,000 annual increases, Eastern Washington agricultural employers see warehousing cost rises, and restaurants warn of closures from wage and property tax pressures, as relayed by Johnson in his 2025 State of Manufacturing address reported by The Center Square on October 2, 2025.
Regulatory frustrations compound this, with businesses citing inconsistent enforcement, outdated systems, and poor inter-agency coordination, per a 2024 Regulatory Roundtable Report.
What role does the state budget play in 2026?
Governor Ferguson's December 2025 proposal addresses a multi-billion deficit through one-time funds, industry shifts, and adjustments, but business leaders deem it unsustainable. The joint statement calls for “a statewide economic development plan to grow jobs and the economy,” rejecting tradeoffs between business costs and social safety nets.
As 2026 legislative sessions loom, priorities include transportation revenue like road-user charges and clean energy development small modular reactors, bioenergy, hydrogen per the Roundtable's 2025 agenda.
Yet, leaders warn budget responses could “make or break some businesses,” per Smith.
Healthcare costs rank second after taxes, with 52% impacted by tariffs, 53% by regulations, per AWB surveys. Inflation lingers at 47% concern.
Washington's export reliance $58 billion last year exposes firms to global volatility.
AWB's spring survey found 72% fearing tariff impacts, with Johnson noting in Tri-Cities Business News on October 9, 2025, “New tariffs and global uncertainty have made things more difficult for manufacturers.”
Federal shifts under President Trump's 2025 inauguration add layers, though state-level taxes dominate local discourse.
Deteriorating conditions risk job losses and stagnation. The Roundtable advocates recognising employers as “an essential part of healthy communities,” pushing partnerships for progress.
AWB's executive summary post-tax hike states it “changed everything,” with trajectory worsening despite easing recession fears.
What solutions do leaders propose?
Collaboration tops the list: partnering with legislators for growth-oriented agendas, results-focused outcomes, and economic plans. Johnson seeks funding essentials “without causing layoffs and skyrocketing costs on working families.”
Smith eyes policies improving quality of life and prosperity, while the Roundtable pushes infrastructure like Move Ahead Washington and clean energy permitting reforms.
Fain and Buono commit to practical solutions keeping Washington vibrant.
From AWB's fall 2025 survey, perceptions soured post-taxes: economy weak (28% vs 17%), downturns (27% vs 17%), expansions down (14% vs 23%). Earlier, tariffs eased but taxes surged.
Roundtable's policy centre analyses reinforce focus on fiscal policy, education, infrastructure amid 2026 headwinds.
In a YouTube Tower Talks episode on October 14, 2025, Washington Policy Center's Todd Myers discussed legislative priorities, noting challenges in advancing policies amid budget strains.
What lies ahead for Washington businesses in 2026?
With sessions approaching, leaders like Smith warn of stakes: economy, jobs, growth. Bassett's plea for consultation with small firms underscores urgency.
Ongoing deficits $12-16 billion projected force choices between cuts devastating services or progressive revenue, per housing advocates, but businesses resist further hikes.
Neutral observers note the ecosystem strain: higher employer costs inflate consumer prices, pressuring all. As Smith leads into 2026, her voice amplifies calls for balanced, pro-growth policies to avert deeper crises.