Washington's revenue forecast for fiscal 2014-2015 has improved slightly. Not enough to dramatically change anything. But good enough to provide a tiny bit of extra budgetary cushion.
The state economist's office predicts $345 million more in revenue will materialize in 2014-2015 than forecasted in June. said Steve Lerch, head of that office, on Wednesday when he briefed the state's Economic & Revenue Forecast Council. "There has been little dramatic change in the economy since our last forecast, and we continue to expect a slowly improving economy," Lerch said.
"It's a relatively small amount and will help us have an ending fund balance larger than 47 cents," said council member Rep. Ross Hunter, D-Medina. Council member Sen. Andy Hill, R-Redmond, echoed that observation.
The next revenue forecast will be unveiled on Nov. 20, with Gov. Jay Inslee having a Dec. 24 deadline to produce his proposed supplemental budget for the second year of the 2013-2015 biennium.
The state's operating budget calls for spending $33.4 billion in 2013-2015, with at least $500 million coming from transfers from other accounts. Roughly $32.7 billion in operating budget income were expected in June. While the math of the constantly fluid numbers is not exact, the extra $345 million will bump the expected 2013-2015 revenue to just over $33 billion.
Part of the extra $345 million comes from an improved state economy, and part comes from legislative changes — such as spending cuts and efforts to create efficiencies — that went into effect during the summer.
Meanwhile, a preliminary estimate for 2015-2017's revenue is $35.7 billion. Marijuana-related income is not used in any of these calculations because state officials don't know what to expect from pot-related taxes.
Lerch also briefed the council on how Washington’s economy has been recovering — at a much slower rate than from the 1990 and 2001 recessions.
New vehicle registrations in August were 17 percent higher than they were in August 2012. While the number of new housing permits is slowly increasing, that rate of growth is less than earlier predictions. The state's shrinking mortgage rates reversed themselves in 2013, climbing from an average 3.5 percent in late 2012 to about 4.5 percent now for a 30-year fixed mortgage.
Lerch noted the growth of Washington's exports has slowed from slightly more than 20 percent growth in 2011 to a little less than 10 percent growth this year. And if Boeing's exports are taken out of the calculations, Washington’s exports would have shrunk slightly in 2013.
Meanwhile, a 6.2 percent forecasted increase in state general fund revenue for 2013 will drop to a predicted increase of 2.4 percent in 2014 because the Legislature let a business-and-occupation surcharge and a beer tax expire, Lerch said.
For exclusive coverage of the state government, check out Crosscut's Olympia 2013 page.