After being introduced Monday as “Dr. Doom,” the state’s economic and revenue forecaster said he didn’t think the title was deserved.
At least not after reporting that state tax collections for the months of October and November were higher than expected by $51.8 million.
When the current budget deficit is $2.6 billion, that might not seem like much. But Arun Raha, the executive director Economic and Revenue Forecast Council, said it is better than the past trend of declines.
“I’ll take five bucks right now,” Raha joked after testifying to the Senate Economic Development, Trade and Innovation Committee. He told the committee these numbers are “the first time we have a positive variance since I have been chasing the numbers down for a year and a half.”
Much of the improvement comes from property tax collections that came in later than normal. Raha attributed that to delayed collections for property in distress from foreclosure or other reasons. But he said overall collections were up slightly as well.
Raha said the collections don’t include Christmas sales yet which he said look to be higher than he forecast in November. Christmas sales look to be up 3.6 percent over last year – compared to his best guess of 2 percent – and that next month’s tax collection report may be up even more than the past two months.
“I think it was the phenomena of pent-up demand,” he said of holiday sales. “People said, ‘Oh well, who’s going to suffer for two years. Let’s go buy something.’ ” Based on national credit card statistics, the purchases were more heavily with debit cards than credit cards, he said.
None of this solves the state budget crisis. It just suggests that it won’t get even worse as it has for each of the last several state revenue forecasts. Unemployment continues to grow and lending by state and regional banks is practically non-existent, Raha said. He now says that the current recession rivals only the Great Depression in severity, far outpacing the recessions in the early 70s, 80s and 90s.
But he said leading economic indicators are pointing upward and he still expects Washington to outpace the nation in job growth and income growth.
“This optimism is tinged with caution,” Raha told the committee. “I am not naive enough to think there aren’t risks.”