March Revenue Forecast Reduces WA General Fund Budget by $698 million
State Economic Forecast Council Director Dr. Arun Raha released the March revenue forecast today. This forecast serves as the revenue basis for the Legislature’s general fund budget in the 2011-13 biennium (FY12 and FY13).
2009-11 Biennium (FY10 & FY11)
While many economic indicators used in his analysis show tentative growth in 2011, revenue collections through March 10, 2011 were $85 million below expectations and growth through the next quarter will continue to lag expectations, contributing to an additional $80 million deficit in the 2009-11 biennium. Legislative leadership confirmed that an additional (fourth) supplemental budget will be needed to reconcile the new FY11 shortfall. The timing of that budget is unknown.
2011-13 (FY12 & FY13)
Weaker growth in several key sectors over the last three months prompted Dr. Raha to increase the projected deficit for the 2011-13 biennium by $698 million. The Legislature will use a $31.9 billion revenue base for the General Fund State. For comparison, the Governor’s December budget was based on a $32.1 billion general fund state budget.
While we anticipate the House will release their operating budget proposal next week, House leadership did not commit to a date.
The March forecast includes new data about the downside risks to our economy including the earthquake, tsunami, and risk of nuclear meltdown in Japan. Further, Dr. Raha states that the most significant threat to economic growth is the energy market. He fears escalating gas prices will continue to erode consumer confidence, regardless of job growth. These downside risk factors overwhelm any upside risks (employment growth, consumer confidence, and commodity prices) by 10 percent.
Please check this blog regularly for state budget updates as they become available.