Washington’s state budget took a large hit this morning. The March Economic & Revenue Forecast, released today, shows an additional $777.8 million decline in revenue between now and 2013.

The Forecast will require Washington to further reduce the budget for the current fiscal year by $79.8 million and by $698 million in 2011-13.

The forecast widens the state’s budget shortfall from $3.6 billion to $5.5 billion. The shortfall is the difference between projected state revenues and what it would cost to continue state services at current levels, plus pay for wage and benefit increases, new programs and higher costs to keep up with inflation and population growth.

Washington’s State Chief Economist, Arun Raha stated that the revenue forecast is primarily down because the economy is not recovering as quickly as previously expected. In addition, Raha cited conflict in the Middle East and the subsequent hike in oil prices  as well as the economic impact to the state from the natural disasters in Japan as contributors.

The latest revenue projections are in line with what budget writers had been expecting. Though budget action has not been scheduled for next week, it is likely to take place soon so stay tuned.