The forecast of how much money the state expects to collect over the next 22 months is $231 million lower than the estimate that was made back in June, and the amount of money collected in the last couple months of the 2007-09 budget period is $7 million lower.

The bottom line is this: Based on this most recent forecast, the state would end up about $190 million in the hole by mid-20011, the end of the current budget cycle. That's after lawmakers spend the entire Rainy Day savings account.

Victor Moore, the governor's budget director, said he's in the midst of writing a supplemental buget that will cut an additional $500 million to $1 billion from the 2009-11 budget that was signed into law in May. He said he doesn't expect the state to actually end up in the hole at the end of the budget cycle (June 30, 2011) because there will be two legislative sessions between now and then for lawmaker to re-write the budget so we end up in the black.

Lawmakers on hand at the revenue forecast council meeting said they see no need for a special session before the regular one scheduled for Jan. 11, 2010.

Here is the news release from Arun Raha, the state's chief economist. And further down are statements from members of the Economic and Revenue Forecast Council.

OLYMPIA, September 17, 2009 – The national and state economies have performed about as expected in our June forecast. It now seems very likely that the recession ended in the third quarter of 2009. That only means that economic activity has stopped declining. It does not
mean that good times are back.

The recovery will be slow with consumer spending understandably restrained; and unemployment will remain elevated for some time. As a result of
weaker than expected spending, we have made a relatively modest $238 million reduction to our revenue forecast.

Actual General Fund State revenue in the 2007-09 biennium was $27.7 billion, which was $6.8 million less than expected in the June forecast. The September 2009 forecast for the 2009-11 biennium is $29.6 billion, which is $230.9 million less than expected in June. Of the $230.9 million decrease in the forecast for the 2009-11 biennium, $109.6 million is attributable
to weaker forecasted spending by consumers.

A decrease of $46.1 million is from recognizing potential B&O refunds and lower collections going forward, as a result of the recent State
Supreme Court decision in the HomeStreet case regarding B&O taxes on interest earnings.

The remaining $75.2 million forecast reduction was due to actual collection experience during the first two months of this biennium.
As required by law, optimistic and pessimistic alternative forecasts were developed for
the 2007-09 and 2009-11 biennia. The forecast based on more optimistic economic assumptions
netted $1,445 million (4.9%) more revenue in the 2009-11 biennium than did the baseline
forecast. The pessimistic alternative was $1,357 million (4.6%) lower in 2009-11. An alternative
forecast based on the average view of the Governor's Council of Economic Advisors yielded $49
million (0.2%) less revenue in the 2009-11 biennium than did the baseline forecast.
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Rep. Ed Orcutt, R-Kalama, is a member of the forecast council and top Republican on the House Finance Committee.

Orcutt issues statement on today's revenue forecast

'The governor needs to do more than shed a few state jobs, she needs to shed state regulations,' says Orcutt. 'Regulations that are leading to more and more people being unemployed.'

Rep. Ed Orcutt, R-Kalama, member of the Revenue Forecast Council and ranking member of the House Finance Committee, issued the following statement regarding today's revenue forecast:

"We keep hoping the end to our state and national recession is near, and perhaps it is. It looks like we've finally hit bottom, but that's still a difficult place to be, especially for those who are unemployed and looking for work.

"Washington lost another 8,000 jobs last month as our unemployment rate rose to 9.2 percent. Boeing is looking at South Carolina with keen interest, the state Department of Labor and Industries is talking about a 15 to 20 percent increase in employer workers' compensation rates for 2010, and our state has the nation's highest minimum wage. The writing is on the wall and it clearly says, 'Jobs Not Welcome.'

"This state and its leaders should be exhausting all resources and making every effort to attract jobs to our area and retain the precious family-wage jobs that we have. The governor needs to do more than shed a few state jobs, she needs to shed state regulations - regulations that are leading to more and more people being unemployed.

"I have joined with several of my House Republican colleagues in writing a letter to the governor, urging her to do more in terms of cutting through the regulations and the bureaucracy that hinders our employer community from creating jobs. That letter should be on her desk tomorrow and I look forward to her reply.

"While Olympia and Washington D.C. worry about reducing carbon, families are worried about putting food on the table. Olympia gives unemployed workers another $45 per week, when what they really want is 40 hours of work per week.

"While we need to worry about our budget, and budget writers need to prepare now for us to take swift fiscal action in the 2010 session, we need to worry more about what impact this economy is having on Washington's families. When we resolve the issues they face by getting them back to work, the revenue will return."

Here's one from Joe Zarelli, top Republican on the Senate's main budget-writing committee:

Sen. Zarelli statement on state’s September revenue forecast

OLYMPIA… Sen. Joseph Zarelli, Senate Republican leader on the state Economic and Revenue Forecast Council, was unable to attend this morning’s council meeting but issued this statement regarding the September quarterly revenue forecast his colleagues adopted at the Capitol:

“Whether or not the state economy is recovering, the level of revenue the state is now collecting should be viewed as the new norm, not as a temporary drop from the norm. The baseline has been reset. We as legislators should reset our thinking accordingly.

“Washington families and employers are being forced to economize, to look at every opportunity for reducing costs. Yet earlier this year the legislative majority passed up opportunities to adopt several significant money-saving reforms in areas like social and health services which account for a majority of state spending. Fortunately those reforms are still available.

“Regardless of how the national health-care discussion turns out we can lower the cost of the state’s Basic Health Plan while upholding its original intent. While the debate about K-12 education funding takes place in courtrooms and task force meetings, the Legislature can adopt a better, less-expensive approach to bilingual education. And we can, at last, make use of the 2002 law that allows an expansion of competitive bidding to lower the cost of certain state programs.

“Prior to today’s forecast the operating budget was out of balance by about 525 million dollars, not counting the voter-approved rainy-day fund, after factoring in the June caseload forecast, budget vetoes and other revenue assumptions that fell through. Now it’s at about 765 million dollars, which is a huge gap for the governor to try addressing on her own. We shouldn’t count on more bailout money from the federal government, and I don’t sense the voters of Washington are in favor of the majority party’s proposals to raise taxes, so the Legislature simply has to step up.

“The time to begin considering reforms to save money is in two weeks, when legislators come to the Capitol to prepare for the 2010 session. Next March, when it’s time to adopt a supplemental budget, will be too late.”

Categories: Taxes, Washington Legislature
Tags: State budget