Revenue Forecast Relatively Unchanged – Projects Shortfall for 2013-2015

An updated quarter revenue forecast was released yesterday, November 15th and things remain relatively unchanged since September. The Forecast Council’s revenue projection for the current biennium (2011–13) increased, but by only $8 million. As reported in a news release by the Office of Financial Management, Forecast Council Executive Director Steve Lerch stated, “Revenue collections are on track, but personal income is falling off slightly compared to our previous forecast,”  …  “Our overall forecast is down a very small amount as a result.”

However, things are not as bright looking into next biennium and beyond. Washington faces a projected $900 million state budget shortfall for the 2013–15 biennium and an even larger shortfall of nearly $1.1 billion for the following biennium (2015–17).

The $900 million deficit, however, is slightly better than projected in September and that has Governor Gregoire upbeat. According to the news release, Gregoire stated she was “encouraged by many of the economic indicators underlying today’s forecast, especially in the housing and export sectors.” “Housing is more affordable than it has been in a long time and aerospace remains strong,” Gregoire said. “While we are seeing clear signs of recovery, economic growth remains slow, and we have to ensure that every Washingtonian who wants a job has one.” She also stressed the forecast does not take into account the any additional spending that will be needed to meet basic education needs identified by the state Supreme Court in the McCleary decision.

“We have a shortfall even before we begin trying to address McCleary,” Gregoire said. “I’ve instructed state agencies and my fiscal staff to scrub the budget for every possible savings. But, as I’ve been saying for months, it will not be possible to solve this problem entirely with spending cuts.”

Gregoire is in the midst of preparing her final budget as Governor before Governor-elect Jay Inslee takes the reins in January. Governor Gregoire’s budget recommendations will likely be one of many before the end of the 2013 legislative session.  Inslee will have an opportunity to release his own budget, as well as Democrat and Republican Senators and Representatives.

Additionally according to OFM, today’s revenue forecast increases projected General Fund revenue for the current biennium to $30.9 billion. The Forecast Council’s forecast for the 2013–15 biennium now projects revenue collections will be about $33 billion.

While the Forecast Council’s four-year outlook shows revenue growing to about $36 billion in the 2015–17 biennium, it also projects a nearly $1.1 billion shortfall for that two-year budget.