I'm Paris Jackson in the Cascade PBS newsroom.

Welcome to The Newsfeed.

This year, state lawmakers are considering a tax on millionaires to close a budget shortfall.

But opponents say it could drive businesses and wealthy individuals out of the state.

Reporter Venice Buhain has more on the story.

VO: As Washington faces a possible $2.3 billion shortfall for this budget cycle, state Democrats proposed a 9.9% tax on income over $1 million.

Senate Bill 6346 would raise about $3.5 billion in its first year.

It is expected to apply to 30,000 Washington residents, and collections would start in 2029.

The bill carves out exemptions, including retirement accounts, homes and a taxpayer's first $1 million of annual income.

That means for someone making $1.2 million, they would be taxed on $200,000.

Primary sponsor Senator Jamie Pedersen and others said the tax helps the state step away from its regressive tax system.

JAMIE PEDERSEN: This is a way of changing our direction so that our tax system is adequate to the needs that we face in the 21st century.

VO: But opponents say that the bill will drive businesses and wealthy individuals out of the state and could open the door to a broader state income tax.

MATT BOEHNKE: Bottom line with this, I feel like this is a gateway drug to taxing everyone.

VO: Gov.

Bob Ferguson said he wants to see that the money is earmarked for programs aimed at affordability, such as expansion of the state's Working Families Tax Credit and a tax break for small businesses.

BOB FERGUSON So do I support the concept of a millionaires tax?

You better believe it.

Absolutely.

But - and this is a significant but = you know, it just can't be $3.5 billion that goes into our general fund.

VO: If the bill passes, supporters and opponents expect it to be challenged in the courts and ballot boxes.

This is Venice Buhain, Cascade PBS.

I'm Paris Jackson, thank you for watching The Newsfeed, your destination for nonprofit Northwest news.

Go to CascadePBS.org for more