November Revenue Forecast Estimates Continued Growth
On Wednesday, the Washington state Economic and Revenue Forecast Council released its November revenue forecast, which projected a slight increase to General Fund-State (GF-S) collections over the September revenue forecast. The GF-S revenue forecast increased by $215 million for the current 2015-17 biennium and $137 million for the 2017-19 biennium.
- Final GF-S revenue collections for the 2013-15 biennium were $33.666 billion.
- Total projected GF-S revenue for the 2015-17 biennium is now $37.980 billion, 12.8 percent more than the 2013-15 biennium.
- Total projected GF-S revenue for the 2017-19 biennium is now $40.514 billion, 6.7 percent more than the 2015-17 biennium.
- Total projected GF-S revenue for the 2019-21 biennium is now $43.656 billion, 7.8 percent more than the 2017-19 biennium.
Behind the numbers:
- The forecast attributes the higher projections due mainly to increases in retail sales tax and Real Estate Excise Tax (REET) collections.
- The forecast includes slightly stronger personal income and employment but lower housing permits.
- Concerns cited in the forecast include slow global and U.S. Economic Growth, weak labor productivity growth and uncertainty regarding fiscal and trade policy.
- Washington state employment is up by 13,500 net new jobs in September and October.
According to an article in the Tacoma News Tribune, this additional tax revenue will contribute to a 2017-19 state budget that is expected to be more than $40 billion. David Schumacher, Director of the Governor’s Office of Financial Management, stated that this increase in revenue “always helps, but it doesn’t solve the huge problems we’re facing.” One of the biggest problems Schumacher referred to is the Washington state Supreme Court’s mandate to increase K-12 education spending (McCleary v. State of Washington). While there is current debate about the estimated cost of complying with McCleary, the most commonly cited estimate is approximately $3.5 billion, and in Schumacher’s opinion “there’s broad agreement that we’re that neighborhood.”
Governor Jay Inslee will use this revenue forecast and estimates for complying with McCleary when crafting his state budget proposal, which will be released in mid-December in advance of the 2017 legislative session. Stay tuned to the OPBlog for updates on the Governor’s budget proposal when it is released.