Office of Planning and Budgeting

Today’s release of the November general fund state revenue forecast indicates that current biennial revenue is slightly down from September’s projection. The decline is largely due to a technical adjustment which resulted in a $41 million decrease of available funding this biennium, though collections for the current biennium are $16 million over prior projections. The net decrease in November’s revenue forecast is $24 million less than the September revenue forecast.

In other words, new revenue and an offsetting technical adjustment give Governor Inslee a $32.98 million general fund target for his supplemental operating budget, expected in December.

This forecast, once again, does not contemplate any tax revenue associated with the impending sale of cannabis.

It is tempting to copy and paste our post from June’s revenue forecast into this one, as the September revenue forecast cites many of the same themes: continued federal budget instability, rising house prices in conjunction with possible interest rate hikes, and likely economic losses in Asia could disrupt the slow recovery currently underway. However, modest regional employment gains, an uptick in real estate excise tax revenue, and positive personal income growth propelled collections and revenue projections $345 million higher than June’s forecast for the current, 2013-15 biennium.

Interestingly, the 2011-13 biennium closed with an estimated positive variance, $23 million higher than the June forecast.

The Governor will base his 2013-15 supplemental budget on the November forecast, so continued revenue growth will be critical. As in June, the September
revenue forecast did not include tax collections related to the sale of cannabis.

 

The Economic Revenue and Forecast Council (ERFC) released its September revenue forecast on the 19th. Believe it or not: Anticipated revenues for the current (2011-13) and upcoming (2013-15) biennia were slightly ahead of the previous forecast.

Although only eight months of the current biennium remain, revenues are running $29 million ahead of predicted levels due to better than anticipated employment numbers, construction activity, and real estate excise tax collections.

Projected revenues for the upcoming 2013-15 biennium (FY14 & FY15) were raised by $23 million; but, as the full forecast and press release note, the downside risks resulting from potentially stagnant employment gains, an extremely weak Washington export market, sovereign European debt crisis, and possible federal fiscal cliff threaten these modest gains.

While ERFC will refine the revenue forecast again in November and the Governor will use it as a basis for her budget, she and the Office of Financial Management (OFM) have already committed any possible additional revenue above current forecasted levels to K12. Revenue projections may have increased slightly with the release of this forecast, but required expenditures in the upcoming biennium will far outweigh potential revenues. OFM projects a $1 billion deficit out the gate.