New WA revenue forecast: Up a bit
Image
State revenue collections are "bumping along the bottom" and the expected economic recovery is still just around the corner, revenue experts said today in releasing a good news-bad news update.
Bottom line is that actual revenue is up a hair, about $31 million since the November forecast, but when combined with an adverse state Supreme Court tax ruling, the new total is down about $118 million.
Coupled with a new caseload forecast this week that requires lawmakers to pony up an unexpected $96 million more, today's news brings Washington's projected state budget deficit to roughly $2.8 billion, out of a $31 billion state budget. Governor Gregoire expects the state to get nearly $500 million in federal bailout money, and maybe more. Beyond that, Gregoire and the Democratic majorities in the Legislature are planning another round of budget cuts, coupled with new revenue. Both houses are planning to suspend the voter-approved Initiative 960 and its requirement for a two-thirds supermajority to raise taxes in Olympia.
Lawmakers and Gregoire closed a $9 billion gap less than a year ago, avoiding general tax hikes by cutting, suspending or freezing various programs, including voter-mandated teacher pay increases. The state also received a huge bailout from the feds.
The state's chief economist, Arun Raha, said Washington is in the early phase of recovery already and will outpace the national recovery, led by foreign trade, aerospace and software, and then with hiring occurring in other sectors. He added:
"Improvement in the labor market is likely to be hesitant and slow. ... Consumer confidence remains low, credit remains tight and the housing recovery may falter after the homebuyers' credit expires."
Tax collections actually have been up $61 million in the three months since the previous revenue forecast, and if the Supreme Court's "Dot Foods" decision hadn't gone against the state, the bottom line would show the first increase since the Great Recession began. That court decision means the state has to refund $57 million taxes to out-of-state direct sellers and forego $95 million in expected revenue. The Legislature is expected to re-establish the tax.
Governor Gregoire said:
“Although our economy appears to have stabilized, we must continue to focus on job creation. We can and must encourage employers to start hiring and capitalize on new opportunities. I urge the Legislature to adopt my plan to accelerate our recovery and give businesses the confidence they need to create jobs.”
(no html)
Secretary of State
Steve Hobbs
Image
