Nice Pension You Got There. Too Bad Washington Democrats Took $4 Billion of It...

Issue No. 14 | June 2026

The Washington Legislature Took Their $4 Billion, Sent Half a Billion to a Climate Slush Fund, and Called It Budgeting

The Law Enforcement Officers’ and Firefighters’ Retirement System Plan 1, known in Olympia as LEOFF 1, was closed to new members in 1977. The cops and firefighters who paid into it across the next half century did the thing every politician in America tells working people to do. They put money in, decade after decade, and trusted the state to keep its end of the deal. By June 2024, the plan was 160 percent funded. The state actuary projected it would reach more than 200 percent by 2029. Roughly 5,945 retired first responders were receiving benefits from it. The fund did not have a hole. The fund had a surplus large enough to make a legislature with a hole in its own budget start to look at the surplus the way a hungry teenager looks at the last slice of pizza on the counter.

So Olympia ate the pizza.

On April 1, 2026, Democratic Gov. Bob Ferguson signed Engrossed Second Substitute House Bill 2034 into law. The bill terminates LEOFF 1 on June 30, 2029, replaces it with a successor fund holding only 110 percent of projected liabilities, and reallocates the surplus, roughly $4 billion, to two places. About $569 million is earmarked for the state’s Climate Commitment Account. The rest, somewhere north of $3.4 billion, lands in the Pension Funding Stabilization Account, a holding tank from which lawmakers can draw to plug general budget holes during the 2027-2029 biennium (Reason Foundation, Wall Street Journal).

On April 30, 2026, nine retired first responders, led by former King County Sheriff and former Congressman Dave Reichert, filed a federal class action against the state, the Department of Retirement Systems, and its director, Kathryn Leathers, in U.S. District Court for the Western District of Washington (Hagens Berman, Seattle Weekly). The suit accuses Washington of violating the Contract Clauses of both the federal and state constitutions. According to the lawyers at Seattle’s Hagens Berman, this is the first time in American history a state has ever simply terminated a public employee pension plan.

The first responders who ran toward the calls now have to run toward a federal courthouse to get back the money they were promised. That is where Washington is in June 2026.

What the Centercratic Party Stands For

The Centercratic Party rests on nine governing principles. Three of them are bleeding out on the floor of Olympia.

The first reads: “Safeguard Our Democratic System. Govern through compromise, not domination. Reject extreme tactics by special interests and defend the Constitution for everyone.” HB 2034 is not compromise. It is a one-party majority terminating a contractual pension obligation that has been in force since 1969 in order to feed a different one-party majority’s spending priorities. The bill passed the House 55 to 39 on its first run, passed again 50 to 46 on the concurrence vote, and passed the Senate 25 to 22 (Washington State Legislature). Every yes vote in both chambers came from a Democrat. Every Republican voted no. That is not governance. That is domination with a roll call vote.

The fourth reads: “One Law for All. The law applies equally to all. Independent courts ensure fair process and protect basic rights.” Washington state law, specifically RCW 41.26.040(3), states plainly that “all funds held by any firefighters’ or police officers’ relief and pension fund shall remain in that fund for the purpose of paying the obligations of the fund.” That is one law for all of us, including the legislature. The Hagens Berman complaint quotes the statute, then alleges that HB 2034 “violates RCW 41.26.040(3) by requiring the transfer of at least $2.5 billion (and likely billions more) out of the LEOFF Plan 1, after which the money may be transferred to the general fund during the 2027-2029 fiscal biennium” (Hagens Berman press release). If “one law for all” means anything, it means the people who write the laws do not get to ignore them when the budget gets tight.

The seventh reads: “Govern with a Balanced Approach. Champion centrist solutions rooted in unity, fairness, and forward thinking.” There is a balanced way to handle a 160 percent funded pension. You could lower employer contribution rates and free up money in city and county budgets, where police and fire are actually paid. You could expand benefits for surviving spouses. You could leave the cushion in place against a market downturn, which is what cushions are for. What you do not do, if you are a centrist with a calculator, is terminate a 50 year old contract with retired cops and firefighters so that you can move $569 million into a separate fund nobody negotiated for. That is not balance. That is a raid wearing a green ribbon.

Three principles, one bill, $4 billion, a federal lawsuit, and an entire caucus that voted yes on all of it.

How a 160 Percent Funded Pension Becomes a Climate Slush Fund

Washington entered the 2026 session staring at a multi-billion dollar budget gap. The state’s tax revenue projections had softened. The Climate Commitment Account, funded by carbon allowance auctions under the state’s cap-and-invest program, was running short of what House Democrats had wanted to spend out of it. The Washington Policy Center, in a February 2026 analysis, summarized the House budget approach in one sentence: “The House partially follows that approach but then raids the LEOFF 1 pension fund to backfill the climate account” (Washington Policy Center). The Senate’s competing budget did not include the LEOFF 1 transfer. The Senate eventually folded.

The architect of the bill was Rep. Timm Ormsby, a Democrat from Spokane and the chair of the House Appropriations Committee. Ormsby reintroduced HB 2034 in the 2026 session after a 2025 version stalled. This time he moved it out of his own Appropriations Committee without a public hearing in that committee, and the House passed it on a 55 to 39 vote on the evening of Friday, February 13, 2026 (The Center Square, Washington State Council of Fire Fighters). The Senate took it up in Ways and Means later that month, passed it 25 to 22 on March 6, and the House concurred March 12. Ferguson signed it on April 1.

Ormsby, asked by the Washington State Standard whether the legal challenge his own bill invited might succeed, said the lawsuit “runs afoul of any court precedent.” In the same interview, he insisted, “Whatever pension those firefighters and law enforcement signed when they came into service, those benefits are guaranteed” (Seattle Weekly). That is the legislator who just rewrote the pension reassuring you that he didn’t rewrite the pension.

The numbers Ormsby’s bill actually moves are these. About 80 percent of contributions into LEOFF 1 came from the state. The remaining 20 percent was split between local government employers and the workers themselves. The plan was 160 percent funded as of June 2024 and projected to exceed 200 percent by 2029. HB 2034 caps the new fund at 110 percent of liabilities, sweeps the difference, and earmarks $569 million of it for the Climate Commitment Account, where it backfills the money the House wanted to redirect to a working-families tax credit (Reason Foundation, Washington Policy Center).

The Wall Street Journal editorial board, not normally a publication retired cops and firefighters get a lot of help from, called the move what it is. “On April 1, Washington’s Governor Bob Ferguson enacted House Bill 2034,” the Journal wrote. “Of this surplus, $569 million is directed to a ‘climate commitment account,’ while approximately $3.4 billion will be available for general spending by lawmakers starting next year” (Wall Street Journal). Translated out of editorial English: half a billion dollars of money set aside for retired first responders is being used to plug a hole in a climate program, and the rest of it is being parked in a vehicle the legislature can drain to plug any other hole it has.

The Washington State Council of Fire Fighters, which negotiated the only meaningful concession in the bill, was reduced to advertising what the bill does not do. “HB 2034 does not reduce benefits. HB 2034 does not change eligibility. HB 2034 does not alter pension formulas or COLAs. HB 2034 does not eliminate medical benefits” (Washington State Council of Fire Fighters). Every one of those sentences is true. None of them addresses the actual question, which is whether a state can simply walk into an overfunded pension trust and walk out with $4 billion.

Reichert, who paid into LEOFF 1 from his first day as a King County deputy in 1972, put the human version of it on the record. “The reasons for needing the money are suspect to us,” he told the Washington State Standard, “and it’s also offensive that they’ve just disregarded the emotional, physical trauma that these 5,500 remaining cops and firefighters have experienced throughout their career.” Then he said the line that has now traveled through every police union newsletter in the country. “It almost seems like elder abuse in a way” (Seattle Weekly).

A 75 year old retired sheriff is using the phrase “elder abuse” to describe what his own state government just did to his pension. That sentence should end somebody’s career. In Washington, in June 2026, it has not ended anybody’s.

Once Again

Every yes vote on HB 2034 in both chambers was a Democrat. That is one party’s failure in plain sight. The other party’s failure is quieter and, in the long run, just as damaging. Washington Republicans had no power to stop this bill, but the national Republican Party has had years to make pension protection a real federal floor and has chosen, again and again, to fight every other culture war first. The Contract Clause is in the Constitution. It has been there since 1789. It exists precisely to stop a temporary legislative majority from breaking the promises a previous government made to the people who served it. If that clause cannot protect a 160 percent funded police and fire pension from being raided to feed a climate slush fund, it cannot protect anything, and both parties have spent two generations letting it erode.

Meanwhile, the cushion is gone. LEOFF 1 used to have 60 cents on the dollar above what it owed its retirees. Starting June 30, 2029, it will have ten cents, and the rest will be sitting in the Pension Funding Stabilization Account waiting for the next legislator with a budget problem and a story about emergencies. The first time the stock market drops 20 percent in a year, those retired cops and firefighters are going to find out what 110 percent funding looks like the morning after. They will discover, the way Detroit retirees discovered, the way Puerto Rico retirees discovered, that “guaranteed” is a word politicians use right up until the moment they need the money.

Once again, our parties have failed us. Democrats wrote and passed a bill that violates their own state’s pension trust law to feed a climate program that has nothing to do with policing or firefighting. Republicans, locked out of the building, offered no national alternative and no federal backstop. The retired first responders are now in federal court arguing that a contract is a contract, and they have to hope a judge agrees with them before the 2027 budget writers get to work.

We have to save our democracy before it is too late, because nobody inside this Capitol is going to do it for us. The first responders ran into the burning buildings on the front end of the deal. The rest of us have to refuse to let Olympia walk out the back with their pensions on the way out.

That is the wave.

The CenterWave is published by CenterVoter, the home of the Centercratic Party. Visit centercratic.party | centervoter.com