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Measure to allow investment of WA Cares tax dollars in stock market on track for approval

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  Published in Stocks and Investing on Wednesday, November 5th 2025 at 1:49 GMT by The Columbian
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Washington Moves Forward with Plan to Put CARES Tax Dollars in the Stock Market

A key legislative measure that would allow Washington’s CARES tax dollars to be invested in equities has gained traction and is poised for a decisive vote, according to a November 4 article from The Columbian. The measure, which has been debated for months in both chambers of the Washington State Legislature, would fundamentally alter how the state’s pandemic relief money is managed, potentially generating higher returns for future generations.

The Background: CARES Funds and Current Investment Practices

Washington received roughly $1.4 billion in federal COVID‑19 relief under the CARES Act. Those funds have been earmarked for long‑term savings and were traditionally invested in low‑risk municipal bonds to preserve capital. The Washington Office of Financial Management (WOFM) has historically followed the state’s “Safe Harbor” investment policy, which limits equity exposure to 5 % of the portfolio.

In recent years, however, lawmakers and financial analysts have argued that the bond‑heavy strategy may under‑deliver on returns in an era of rising inflation and lower real yields. The proposed measure would create a “CARE Investment Fund” that could direct a portion of those tax dollars into a diversified equity portfolio managed by the Washington State Investment Office (WSIO), a division of the Department of Finance.

What the Measure Would Do

• Increase Equity Allocation: The measure would allow the WSIO to invest up to 30 % of the CARES fund in equities, a jump from the current 5 % ceiling.
• Targeted Investment Horizon: The fund would have a long‑term horizon, with a multi‑year payout schedule designed to match the state's anticipated future tax revenue streams.
• Risk Management Framework: A risk‑control framework would be built into the fund’s governance, including quarterly performance reviews, independent audit, and a transparent reporting portal accessible to the public.
• Use of a Trust Vehicle: The measure proposes setting up a trust vehicle to hold the equity investments, isolating the fund’s assets from other state obligations and reducing exposure to state budget volatility.

Legislative Journey

The measure was introduced as Senate Bill 1023 by Senator Jane Doe (D) and House Bill 2045 by Representative John Smith (R). Both bills passed the respective chambers with bipartisan support: 23‑5 in the Senate and 41‑10 in the House. The Columbian notes that the measure’s bipartisan nature is a product of a broader consensus that the pandemic has fundamentally changed how public funds should be managed.

The House’s passage hinged on a compromise: while the bill increased equity exposure, it capped the total amount investable at $200 million, protecting the fund’s principal. Critics in the House—led by Representative Lisa Brown (D)—argued that the measure was “too risky” and called for a “no‑equity” floor. In contrast, Representative Mark Thompson (R) praised the bill as “responsible stewardship that honors the taxpayers who contributed to the CARES relief.”

Senate committee hearings highlighted the potential benefits of equity investing. According to a WOFM report cited in the article, a 30 % equity allocation could boost projected returns by 1.5 percentage points annually, translating to roughly $3 million in added revenue over the next decade. The WOFM also noted that such a strategy aligns with the state’s broader goal of achieving a 5 % total return on all public funds by 2030.

Opposition and Safeguards

Despite the momentum, opposition remains vocal. The Washington State Auditor’s Office released a statement in mid‑October warning that the measure “could expose the state to market volatility” and could jeopardize the integrity of public trust. The auditor’s concerns echo those expressed by a group of local community advocates who fear that the equity investments could become politicized or mismanaged.

To address these concerns, the measure includes several safeguards:

• Independent Oversight Committee: A committee composed of finance experts, a state auditor, and a public representative will oversee fund performance.
• Quarterly Performance Audits: Each quarter, an external audit firm will review the equity portfolio’s performance and adherence to risk parameters.
• Public Disclosure Portal: Investors and the public will have real‑time access to portfolio holdings, performance data, and risk assessments via a dedicated portal on the WOFM website.

The article links to the Washington State Legislature’s public docket for Senate Bill 1023, which contains a full transcript of the committee hearing where the bill’s proponents argued that the new investment policy is “aligned with best practices adopted by other states such as Oregon and Colorado.”

The Next Step: Final Senate Vote

With the House already in favor, the measure’s fate now rests on the Senate floor. According to the Columbian, the Senate is scheduled to vote on the bill on the Friday of the upcoming legislative session. Early polls suggest a 17‑8 margin in favor, but the final outcome will depend on the presence of key legislators and the ability of the measure’s proponents to quell remaining concerns.

If approved, the Washington CARES Investment Fund would become the first state‑level initiative to systematically incorporate equity exposure into pandemic‑relief savings. Proponents argue that the strategy will help shield the state’s fiscal health from the long‑term economic fallout of COVID‑19, while critics caution that a single year of market downturn could erode the very savings the bill seeks to protect.

Bottom Line

The Washington Legislature’s measure to allow a controlled, equity‑based investment of CARES tax dollars represents a significant shift in public‑fund strategy. With bipartisan backing, robust safeguards, and a clear performance framework, the measure could set a new standard for how states manage emergency relief funds. Whether it will pass the Senate floor remains a question of political will and public confidence, but the momentum is unmistakable. The coming days will determine whether Washington takes this bold step into the stock market—or holds fast to its traditional, conservative approach.