Washington House Bill Raids Billions from Pension Plan Amid Tax Hikes

Lawmakers pass legislation to terminate LEOFF 1 retirement system and transfer $4.5 billion, drawing criticism from Republicans and pension advocates.

Published on Feb. 21, 2026

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The Washington State House has passed a bill that terminates the Law Enforcement Officers' and Firefighters' Retirement System Plan 1 (LEOFF 1), creates a new plan, and transfers $4.5 billion out of the existing plan. The fiscal policy decision has drawn strong rebuke from House Republicans, while pension plan advocates warn of future implications for other state pension plans.

Why it matters

LEOFF 1 is a well-funded pension system for law enforcement and firefighters, leading some to question the need to raid the plan's surplus while the state also passes record tax hikes. Critics argue the move sets a dangerous precedent that could threaten the security of other public pension plans in Washington.

The details

House Bill 2034, sponsored by House Appropriations Committee Chair Timm Ormsby, D-Spokane, passed the House in a 55-39 vote. The bill terminates LEOFF 1, which was created in the late 1960s and closed to new members in 1977, and transfers $4.5 billion out of the plan despite it being projected to be over 100% funded to meet its obligations to pensioners.

  • The fiscal policy decision was made during the 2026 legislative session.
  • House Bill 2034 was reintroduced this year after failing to clear the chamber in 2025.

The players

Timm Ormsby

A Democratic state representative and chair of the House Appropriations Committee, who sponsored House Bill 2034.

Joe Fitzgibbon

A Democratic state representative who told colleagues on the House floor that the LEOFF 1 plan is in a "very healthy financial state" and that retirees will get what was promised.

John Ley

A Republican state representative who questioned whether the promise to pay all benefits owed to LEOFF 1 members would be kept, citing past instances of lawmakers breaking promises.

Matt Marshall

A Republican state representative who argued the money is being diverted despite large tax increases, and that the pensioners' money should not be touched.

Jim Walsh

A Republican state representative who said proposals to raid LEOFF 1 were previously considered a "third rail proposition" due to Washington's fiscal rectitude, in contrast to other states.

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What they’re saying

“Every nickel now of benefits owed to LEOFF 1 members will be paid. We guarantee that in this bill and we actually leave an extra buffer to make sure that if something unforeseeable happens, that there is a reserve ready to pay all of the benefits.”

— Joe Fitzgibbon, State Representative (dailyfly.com)

“I am wondering if this is another pie crust promise, a promise made, but a promise easily broken. If we do this, how many more times might a future legislature come and raid this fund? If this were a private corporation, we'd be screaming bloody murder.”

— John Ley, State Representative (dailyfly.com)

“What the public is going to see is not that money is being shifted to balance the budget. They're going see the money's being used in so many ways on so many unsustainable programs that we've forced ourselves into a hole – a year after we have record increases in taxes. We're immediately coming back and asking our retirees to shoulder a massive, massive shift of their funds to balance the budget.”

— Matt Marshall, State Representative (dailyfly.com)

What’s next

The bill now moves to the Washington State Senate for consideration.

The takeaway

This controversial decision to raid a well-funded public pension plan, even as the state imposes record tax hikes, raises concerns about the security of retirement benefits for public sector workers and the potential for future legislative raids on other pension funds.