This morning the September state economic and revenue forecast was released.  The forecast shows the state faces a projected shortfall of $1.4 billion for the 2011-13 biennium.  With approximately $163 million in reserves, this creates a $1.2 billion hole in the state budget.

Washington’s Chief Economist, Dr. Arun Raha set the context for the latest reduction in state revenues. According to Raha, consumer and business confidence continues to be low, uncertainty in the European economy remains high, and  job growth continues to be weak with a steady unemployment rate of 9.3%.

Forecast estimates show a decline in revenue of $500 million in FY12 with the remaining $900 million in FY13. In addition to the $1.4 billion, legislators are focused on rebuilding state reserves, which could make the reductions to the state budget closer to $2 billion.

So what is next. It appears that the Governor and budget writers in both chambers are coalescing around the idea that early action is needed and to accomplish this the best vehicle would be a special session prior to the 2012 supplemental session in January.  If a special session is called there appears to be agreement that it should be short and concise, with most of the decisions being made prior to convening the Legislature.  

Timing for a special session appears to be ranging from the end of October to after the November forecast.