Yesterday the Washington Economic and Revenue Forecast Council released the March economic and revenue forecast.

The forecast is essentially flat. Which is good news these days. According to the report Washington is projected to take in an additional $59 million more than expected in the current fiscal year and $19 million less over the next biennium. Overall policymakers have approximately an additional $40 million to incorporate into their budget discussions.

This is good news given concerns expressed in the last few weeks about impacts on state revenue given the automatic federal budget cuts, known as sequestration, earlier this month.

Though this is a small break in what has been a stream of bad news over the last few years, it is important to note that policymakers still face a substantial budget challenge for the next two years. The Legislature must make up a shortfall of $1.3 billion and make some form of investment in basic education required by the McCleary ruling.

With the revenue forecast out, the next big step in Olympia will be the release of proposed biennial operating and capital budgets. The Senate is expected to come out with their proposed budget in the next two weeks, followed by the House. The Governor is expected to release budget priorities, not a full budget, next week sometime.