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January tax collections suggest March state revenue forecast will be flat at best

Post by Peter Callaghan / The News Tribune on Feb. 11, 2011 at 3:06 pm with 7 Comments »
February 11, 2011 3:12 pm

An update of state tax collections released today suggests that the March Miracle some budget writers are dreaming of may not materialize.

March 17 is when the next state revenue forecast will be approved and it is that report that will be used to write the 2011-13 budget. Some have been hoping that it will show a sooner-than-expected economic recovery and a higher-than-predicted revenue estimate. Any amount that is above the November forecast would be welcome.

But Friday’s February update shows that collections are actually down from what was projected. While some of that is due to non-economic reasons (such as a change in how and when the state collects some taxes) the collections would be down anyway.

“Major General Fund-State (GF-S) revenues for the January 11 – February 10, 2011
collection period were $105.9 million (8.4%) lower than our November forecast, but most
of the negative variance in this period is estimated to have been due to a change in the
payment pattern of Revenue Act taxes,” said the report of the state Economic and Revenue Forecast Council.

Arun Raha (by New Tribune's Drew Perine)
“In addition, there was a $26.6 million refund of retail sales and use taxes during the current collection period. Without this refund, the forecast variance would have been -$79.3 million (-6.3%).”

Timing of payments rather than a declining economy is likely to blame for the fact that January collections – covering sales and activities in December – was $106 million less than expected. That is more than enough to negate October and November collections that had been a robust $61 million over projections.

The forecast warns that it is no longer as easy to assess the vigor of the holiday shopping season. One reason is that much occurs in November rather than December. And the growth of gift cards also shifts sales tax collection from December to the new year.

“A clear picture of the holiday season will not be in focus until the next reporting cycle,” the report stated.

All that said, state forecaster Arun Raha was relatively buoyant about the state economy.

“The Washington economy ended the last year on a positive note with improvements in
both the housing and job markets,” the report concluded. “Consumer price inflation in the Seattle area remains moderate in spite of a jump in energy prices; and migration into Washington State appears to be picking up.”

“The national economic recovery continues, albeit at a gradual pace,” the update concluded. “The data present a mixed picture, but on balance the news is generally positive. Uncertainty remains, so we will continue to watch the progress very carefully one month at a time.”

Leave a comment Comments → 7
  1. taxedenoughintacoma says:

    Democrats have been wait ing for a rosey forcast so they don’t have to cut their fluffy social programs. Well no new money coming your way so break out the meat cleaver.

    Taxpayers, keep starving the beast. Our plan is working. Avoid paying all sales tax. Cash is king. Don’t send a dime to Olympia if you can avoid paying sales tax.

  2. tree_guy says:

    This guy has been giving conflicting and ultimately incorrect economic advice for quite a few years. Isn’t it time to get a new state forecaster? How much does it pay to make this meaningless announcement every month:

    “The data present a mixed picture, but on balance the news is generally positive. Uncertainty remains, so we will continue to watch the progress very carefully one month at a time.” How profound.

  3. tree_guy says:

    Only in Washington State would news of a one month $106,000,000 revenue shortfall be described as “generally positive.” The Gregoire sideshow continues.

  4. WaTeachersUnite says:

    Very few who have followed state economics over the past 4 years regard Mr. Raja with any credibility anymore. His predictions and forecasts have missed the mark so widely for so many years (pull up his quotes from previous years) that, statistically speaking, his viewpoint is disregarded for not having any basis in reality.

    That said, the Tribune needs a good sound bite from time to time, from someone with a recognizable name. Too bad the Tribune won’t run a series of Mr. Raja’s previous predictions. It would make for humorous reading. How about it Peter? Take a look. Past quotes from our highly paid state economist are easy to find on line.

    Again, statistically speaking, Mr. Raja would have done better with his forecasts by simply flipping a coin.

  5. jimkingjr says:

    Actually, those who know what Raja is doing have enormous respect for him. We are in uncharted waters, and he hasa done better than most. The disgruntled arev those who wish we could just spend ourselves deeper into the red without any forecasts to restrain us.

  6. There are those people that would not believe there was a flood,even if they were standing in water up to their chin!Those same people will be in denial until the water covers them completely as the rain continues to fall.Wa,Teachers and tree make some very good points.

  7. truthbusterguy says:

    To quote a movie line, “YOU CAN’T HANDLE THE TRUTH”.

    We are broke so admit it. Cut and balance the budget and get to work helping to create jobs.

    And stop punishing the taxpayers. Make sure your friends also feel the pain. And the democrat’s friend is unions, tribes, and trial lawyers. We vote too.

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