On Friday the Washington Economic and Revenue Forecast Council released the most recent revenue report.  Revenue projections through 2017 have increased by $274 million. This raises the 2015-17 state budget to $37 billion.

Amid the good news was the stark reminder that the Legislature still must find a way to deal with I-1351 to lower class sizes – which would create an estimated $2 billion budget shortfall.  Even if the Legislature suspends or even sends the initiative back to the voters, policymakers must still find a way to fund the McCleary decision.

This session policymakers moved the revenue forecast up a month in an effort to move the budget process along.  The next revenue forecast will be released in June.

This morning the Washington State Economic and Revenue Forecast Council released the February revenue forecast.

The forecast shows that the biennial budget will experience a slight increase in revenues – $30 million – compared to the last forecast in November.

General Fund collections are expected to total $33 billion for the current biennium. The forecast for the 2015-17 biennium also increased by $82 million. This includes a projected increase of $51 million from marijuana production and sales, the first time this item has been included in the forecast. The total General Fund for 2015-17 is expected to be $35.7 million for the 2015-17 biennium. The initial forecast for 2017-19 projects a total of $38.7 billion.

Though the forecast shows the state moving in a positive direction, the news was mixed. The Office of Financial Management stated that revenue collections had not grown enough to trigger an automatic 1 percent pay increase for many state employees. The 2013-15 state budget included language that reflects current collective bargaining agreements with unions which would trigger a 1 percent salary increase as a result of increased state economic activity. The February forecast would need to be at least $200 million higher than what was forecast in September 2012. Revenue growth only increased by $11.7 million over this period.

The next revenue forecast is scheduled for release in June.

This morning the Washington Economic and Revenue Forecast Council met to hear the latest revenue projections for the state.

According to State Economist Steve Lerch the combined effect of a recovering economy and tax changes approved by the Legislature this past session are expected to generate $368 million in additional revenue for the biennium. Approximately $123 million is due to actions taken by the Legislature with regard to tax breaks and tax reforms.

In addition the forecast predicts an additional $342 million in new revenue for 2015-17, the majority of which ($249 million) is due to legislative and other non-economic factors.

Lerch stated “There has been little dramatic change in the economy since our last forecast and we continue to expect a slowly improving economy…While we still anticipate an expanding housing market, higher mortgage rates and home prices will slow activity relative to our June forecast.”