The July collections report was just released by state economist Arun Raha and the bottom line that most state budget writers and state budget beneficiaries look for is this – collections from existing state taxes was $22.3 million below what was expected in the quarterly forecast released just three weeks ago.
But Raha quickly adds that the lower collections are expected based on his current view of the immediate future – short-term slowing in the national and state economies followed by a firming up in the second half of 2011.
“Collections are consistent with the forecasted slowing of second quarter activity with improvement
expected in the third and fourth quarters,” the forecast stated. Of the $22.3 million total, $4.1 million was due to a large and unanticipated tax refund and not related to the economy. That drops the economy related decline to $18.2 million – about 1.4 percent.
In an e-mail Monday afternoon, Raha added this: ” We consider collections to be consistent with the forecast as long as adjusted variance is within ±2.5% of target. So since we were -1.4% of target, collections were consistent with the forecast.
“This report was about revenues collected from activity in May, and the adjusted growth in collections slowed as we had expected,” he wrote. “In fact it slowed 1.4% more than we had expected. But it was consistent with the forecast. Here’s the funny part, I would said the same thing if we had come in 1.4% above forecast – that collections slowed consistent with our forecast, coming in 1.4% above target.”
Here are the summary paragraphs of the forecast:
The national economy is performing as expected in our forecast last month. Both economic and labor market activity weakened further in June, but there were also enough signs that this weakness is likely to be temporary, absent a low probability high impact event.
Washington’s economic activity is expected to mirror that of the national economy – short-term weakness followed by firming in the second half of the year.
Here’s a pdf of the 10-page July 11 economic and revenue update.