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Revenue forecast knocks budget cushion down

Post by Jordan Schrader / The News Tribune on June 16, 2011 at 10:09 am with 14 Comments »
June 16, 2011 2:08 pm

UPDATE 11:54 a.m.

A new revenue forecast released this morning taxed reporters’ brains. Some would say that’s not hard to do.

But the reason heads were hurting was because of a weird discrepancy: State Economist Arun Raha‘s forecast for tax collections shrank by only a small amount from his March estimate ($12 million — or $183 million if you start counting next month after most of the effects wear off from a big windfall, the state’s tax amnesty program). But lawmakers and the governor’s office said it reduced their budget cushion by a whopping $575 million.

Just a day ago, when Gov. Chris Gregoire signed the two-year budget, it contained a cushion of $738 million in case of emergency. That balance has now dropped to just $163 million.

As we tried to get our heads around the difference, budget director Marty Brown explained the biggest part of it came from lawmakers moving money around, so it looked like extra tax collections in Raha’s data but actually wasn’t more than what was budgeted. Plus, lawmakers thought the current year’s revenues would jump more than they did based on the amnesty program.

Brown scribbled some notes on the balance sheet (picture below) to help us understand.

Despite the change that almost wipes out the ending fund balance, Brown said he doesn’t think Gregoire needs to call lawmakers back into a special session, barring a “gigantic” change in future forecasts this fall.

That’s because lawmakers aren’t facing the clock like they were last year when they held a special session. They have a while to make the cuts.

“Right now, I don’t think it’s a major problem, because we’ve got two years,” Brown said.

Raha’s gloomier revenue forecast accounts for slower economic growth since March.

He blames it on national and international factors, including turbulence in the Arab world and earthquakes in Japan.

He says the growth should pick up in the second half of 2011.

Any questions?

Leave a comment Comments → 14
  1. why would anyone believe him (Raha) hes been more wrong than right.

  2. PumainTacoma says:

    Obama in 2009: If Economy isn’t Fixed in 3 Years There Will be a 1 Term Proposition

    http://www.breitbart.tv/obama-in-2009-if-economy-isnt-fixed-in-3-years-there-will-be-a-1-term-proposition/

    Gov. Gregoire 2008:
    “Good news everyone! Although the nation is slipping into recession, here in Washington State “our economy is strong” and the only thing that can bring us down is listening to all the “dire talk.” Well, that’s what Mrs. Gregoire would have us believe, anyway…”

    http://seattlebubble.com/blog/2008/02/08/gregoire-dont-buy-into-the-self-fulfilling-dire-talk/

  3. Anyone who believes that Seattle or Washington is immune from economic disaster is hallucinating! We are all headed for a terrible time starting with a housing market that is going nowhere but down for years to come and a dollar that will buy less and less.
    Boomers will leave the market in hoards with no one coming up behind them to fill their shoes. The days of home equity increases and wealth from home ownership are gone. A home today is a shelter and nothing more.
    Good Luck!

  4. tree_guy says:

    What…unbelievable…Arun Ruha overestimated the state revenue…again? who’da’thunk?

  5. jimkingjr says:

    would love to see demeter or tree_guy do a forecast…

    Nah, easier to criticize that which they don’t understand…

  6. PumainTacoma says:

    Economy in a Depression…And people made fun of Glenn Beck when we were told to buy food!

    “Beck suggested that “no one has prepared the American people” for what is to come.”
    http://www.mediaite.com/tv/glenn-beck-warns-america-is-on-the-verge-now-of-a-great-great-depression/

  7. Proconsul8 says:

    We ain’t seen nothin’ yet. If WA legislators think for a minute that the ending balance will still be positive by 2nd quarter 2012, they’re still living in a dream world. California, by then, will have defaulted, as Illinois may also. Metropolitan areas, beware the anarchists driving mobs of entitlement takers who now find that their “benefits” are not being extended and there are no easy-to-find jobs. Being an elected official will NOT be a sought after job in days to come.

  8. This shows us that we have hired the wrong people to keep the government on track both federal and local! Those is both Washingtons cannot keep spending under control. I communicate with my representatives to see what their views are and how they vote. Seldom do they really represent me. I’d run for politics but realize I cannot work with a bunch of morons. Who voted for war in Iraq? Who did not hold treason trials for those that caused the collapse American economy? Starting with the speculators for the cost of gasoline, the housing market collapse, the selling off of American jobs to save on taxes they have to pay? They keep saying that giving tax breaks to the wealthy create jobs – well what happened to all the jobs? The tax breaks were in effect during Bush’s administration and millions of jobs disappeared! Wake up America.

  9. taxedenoughintacoma says:

    Team,
    All of efforts to starve the beast is working. Keep up the good work. Cutting the funds to Olympia and the constraints of I-1053 is the ONLY way we will rein in democrat out of control spending on services for illegals, unions, tribes and welfare freeloaders.

    Do all you can to not pay sales tax. Pay with cash, shop on-line, pay shipping not slaes tax, buy and sell on craigslist, join the underground economy, barter for services, take a trip to Oregon to shop for big ticket items. Study the Dept. of Revenue waviers for paying sales tax on auto purchases, doen’t renew your lic. tabs and when you buy in this state pay cash and tell the seller to wave the sales tax. Many will and sweep it off the books. It’s the only way they can sell stuff to the immigrant populations.

    OK libs, throw your rocks at me but it’s the only way I can protest the corruption in Olympia. I just make sure they don’t get much of my money. Don’t be a chump, join our team.

  10. taxedenoughintacoma says:

    Jimking knows that some people can’t handle the truth. But it is the truth.

    Some don’t want to admit that their legislators can only hope for the best and never plan for the worst.

  11. The headline should read: “My governor lost $575 million overnight and all I got was this lousy T-shirt.” Any state employee that can’t tell the difference between $738 million and $163 million needs to lose his – or her – job immediately. If this happened in a private company, someone would be in handcuffs by noon, with no bail.

  12. olympicmtn says:

    Henry; did you support TARP? Many of us didn’t and don’t expect the government to bail out foreign banks either.

    I suggest the “O” crowd stop blaming the 50% of the population who ACTUALLY PAY TAXES and start asking yourself why so many 99 week paycheck citizens finally find a job (any job) after their last paycheck. My family is so tired of footing the bill for those that did not prepare. Make fun all you want about those that said TOLD YOU SO. The President, Governor, Congress all own this economy. My family also does not appreciate hearing about waste from Washington State government over and over from the DOC to DOT and ferry workers whining about getting paid big bucks 6 figures driving to work. Hello? There is so much waste to cut. I expect to cut the waste first… then come talk to me about whether paying over $200 a day in taxes (income, property, city, etc..) is enough.

    As far as anarchy, 40% of kids 18-22 don’t have jobs… yet have money for iphones, ipads etc. I make no apologies for conserving my hard earn money. Freeloaders take note, no more paydays from the 50% of the population who pays taxes, does not take out huge loans, lives within their means and does not use their house as a piggy bank.

    Bad planning on your part is not a crisis for me to give you my savings.

  13. tree_guy says:

    “would love to see demeter or tree_guy do a forecast..” jim king

    OK, I’ll take that challenge. Even though I’m not a trained economist I will predict that Washington State Revenues will be overestimated by Aran Raha by at least 10 percent on average every quarter for the rest of chris Gregoire’s term in office.

  14. speakout says:

    As hyper-inflation ramps up so will the money we pay in sales tax and a lot of other taxes as well. Two years from now that surplus could bit two Billion, maybe more. And if Seattle votes in another Democrat they will spend it all. Well they do have a habit up there of always being able to find boxes of uncounted votes, no matter how many more they have to print.

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