Monthly Archives: August 2012

Preliminary Economic Forecast Better than Expected

Posted on by

The Washington State Economic and Revenue Forecast Council released a preliminary look at the upcoming September economic  forecast … and the news is slightly better. The preliminary forecast is based on a modified version of Global Insight’s August 2012 Control forecast for the U.S. economy, and while quite small, the new forecast is slightly stronger going into September. As reported by Steve Lerch, Interim Executive Director for the Council, since the June forecast the WA State economy has added 10,300 jobs, 3,500 better than the 6,800 expected in the June forecast. Further, total employment is 7,400 (0.2%) higher in July than expected in the June forecast. Manufacturing employment growth also remains strong, but construction employment growth remains weak, and government employment continues to decline.

The June forecast also assumed some backsliding in housing construction which did not materialize. Housing permits came in at 28,100 units in the second quarter of 2012 compared to 27,700 in the first quarter and 20,600 in the fourth quarter of 2011. And the current estimate of Washington personal income for the first quarter of 2012 is $4.4 billion (1.4%) higher than the June forecast.

Review of the forecast by the Governor’s Council of Economic Advisors is scheduled for Thursday, September 6, 2012 at 10:00 a.m., in the Governor’s Conference Room.

Potential Federal Budget Reductions

Posted on by

In 2011 Congress passed the Budget Control Act (BCA) which imposes caps on discretionary programs, reducing their funding by more than $1 trillion over the ten years from 2012 to 2021.   As many may recall, the act also established the Joint Select Committee on Deficit Reduction (the “Supercommittee”).  The BCA tasked the committee with developing a plan on how to reach the $1 trillion reduction goals and also established a back-up “sequestration” procedure to increase the incentive on the committee to reach a compromise. The Supercommittee failed to achieve its goal, and as a result, sequestration – a form of automatic cuts that apply largely across the board – is now scheduled to occur beginning in January 2013.

In early August President Obama signed into law HR 5872, the Sequestration Transparency Act. The act requires the administration to report, within 30 days of the act, the impact of the looming across-the-board cuts set to take effect January 2013. President Obama believes that both parties can compromise and avert across-the-board cuts; however, both parties have reached no such deal.

Last week the Office of Financial Management (OFM) in Olympia circulated a memo to all state agencies asking that we be prepared to develop proposals for service reduction should the act take effect in January. Evergreen is currently analyzing how sequestration would affect our institution, and will be prepared to respond to OFM if the need arises.

The Government Relations office will continue to monitor Congress’ efforts and report as information becomes available.

Washington Primary Sets Stage for General Election

Posted on by
Reply

Yesterday Washington held the 2012 primary election. The election helps to clear a crowded field of state and local candidates in Washington’s top-two primary system.

Though the top-two vote “getters” advance to the general election in November, some races remain unclear due to low statewide voter turnout.  Currently only 27.5 percent of voters turned out for the primary election. This includes ballots already counted and ballots that arrived at county elections offices but must still be run through the machines. Though the turnout number is expected to increase it is also expected to be very shy of the expected turnout for a presidential election this fall.

In the last presidential election, in 2008, participation was 84.6%. In comparison in a presidential election year, Washington turnout for the primary usually attracts between half and two-thirds of those who participate in the general election. The low voter turnout makes it more difficult to predict what will happen in November – which is not usually the case – because it will be hard to tell which subset of the population actually voted.

Moving forward to the general election in  November, at the time of this post (August 8 2012)  are the following federal, state and local candidates:

  • U.S. Senate: Maria Cantwell (56%) and Michael Baumgartner (30%)
  • U.S. Representative 6th District: Derek Kilmer (54%) and Bil Driscoll (18%)
  • U.S. Representative 10th District: Denny Heck (41%) and Dick Muri (27%)
  • Governor: Jay Inslee (47%)  and Rob McKenna (43%)
  • Lieutenant Governor: Brad Owen (49%) and Bill Finkbeiner (25%)
  • Secretary of State: Kim Wyman (39%) and Kathleen Drew (21%)
  • State Auditor: James Watkins (46%) and Troy Kelley (24%)
  • Attorney General: Bob Ferguson (52%) and Reagan Dunn (38%)
  • Commissioner of Public Lands: Peter Goldmark (52%)  and Clint Didier (41%)
  • Superintendent of Public Instruction: Randy Dorn (55%) and Ron Higgins (16%)
  • Insurance Commissioner: Mike Kreidler (55%) and John Adams (22%)
  • Legislators for the 22nd District: Karen Fraser (100%), Chris Reykdal (100%), and Sam Hunt (100%)
  • Legislators for the 35th District (Position 1): Kathy Haigh (54%) and Dan Griffey (46%)
  • Legislators for the 35th District (Position 2): Drew MacEwen (41%) and Lynda Ring-Erickson (29%)

Executive Branch Projects Billion Dollar Deficit Next Year

Posted on by
Reply

This week the Washington Office of Financial Management (OFM) released a new state budget outlook that puts the state in the red by June 2015.

According to OFM, the Washington state budget would experience a $1 billion shortfall for 2013-15. This doesn’t include the estimated $1.1 billion increase for the McCleary K-12 decision (HB 2776) or leaving any reserves other than the constitutional budget stabilization fund.

OFM identifies the major budget costs that would drive a budget shortfall as:

  • $366 million for actuarially recommended pension payment changes
  • $292 million for K-12 pay increases based on I-732
  • $242 million for increased debt service
  • $171 million to restore the 3% temporary salary cut for state workers
  • $166 million to restore K-12 salary reduction
  • $30 million for federal health care reform
  • $14 million for the “new” paid family leave benefit

The Outlook assumes state tax revenues will grow by $1.5 billion in the next biennium, from $31.2 billion to $32.7 billion.  This expected revenue increase is based on the state’s June Revenue forecast which was adopted with the caution that there is a 40% chance that this increase could be wiped-out depending on economic developments in Europe and actions (or lack thereof) in Congress. It also incorporates the spending-cut decisions made by lawmakers this year and assumes restoration of temporary measures included in the current budget

While OFM has consistently conducted budget outlooks for the state, this year the Office is required to show how the state’s future budgets could be balanced with available resources as a result of legislation passed in the 2012 supplemental budget requiring a balanced four-year budget outlook instead of a two-year forecast.

Governor Names Members to Washington Student Achievement Council

Posted on by
Reply

This week Governor Gregoire named the citizen members to the Washington Student Achievement Council.

On July 1 the Washington Student Achievement Council (WASAC) was established to replace the Washington Higher Education Coordinating Board.  The Council, established in House Bill 2483 during the 2012 session,  will focus on raising educational attainment in Washington state.

Under the legislation, the council is charged with the following duties:

  • Proposing goals for increasing educational attainment, securing resources to support those goals and monitoring progress;
  • Developing a two-year strategic action plan and 10-year roadmap; and
  • Facilitating the development and expansion of innovative practices, developing policy recommendations based upon data and collaborating with other organizations to set minimum college admission standards.

Additionally, the council has been tasked with helping students prepare for and access postsecondary education and training, improving transitions, administering financial aid programs and approving private degree institutions.

The council will be composed of nine members. Four members are selected by four educational entities. The governor’s five appointees are:

  • Brian Baird, former U.S. representative for Washington’s 3rd Congressional District;
  • José Gaitán, managing member of The Gaitán Group, PLLC, and past president of the Hispanic National Bar Association;
  • Jay Reich, attorney at Pacifica Law Group and former deputy chief of staff to former Commerce Secretary Gary Locke;
  • Dr. Constance Rice, managing director for Knowledge Management for Casey Family Programs; and
  • Student trustee Lindsey Jahn, a student at Washington State University earning a bachelor of arts degree in business administration.

Other members of the council are:

  • Jane Sherman, interim executive director of the Council of Presidents, selected by the presidents of the public baccalaureate institutions;
  • Charlie Earl, director of the State Board for Community and Technical Colleges, selected by the SBCTC;
  • Ray Lawton, director and chairman of Lawton Printing in Spokane, selected by the Independent Colleges of Washington; and
  • Scott Brittain, former principal in the Puyallup School District now working in the assessment office at the Office of Superintendent of Public Instruction, selected by OSPI in consultation with the Department of Early Learning and the State Board of Education.