Which means there is no Christmas revenue gift for state lawmakers trying to find $1.2 billion to balance the state budget. Without resorting to more cliches (coal in stockings?), it looks as though they didn’t get any bad news either.
While the December collections report was down by $28.9 million, state forecaster Arun Raha and his staff conclude that the shortage is more a matter of timing than economics – “most of the shortfall was due to earlier-than-expected property tax payments that were already received last month.”
Overall since the November forecast, actual tax collections are just $9.2 million lower than expected. That’s as close to exact as the state should be able to expect. Even that shortage is blamed on one-time tax refunds that were sent out. Without those state tax collections would be up slightly.
Here is how the forecasters summarize the current condition of the economy:
Two months have passed since the November forecast and nothing has gone off the rails. Our preliminary economic forecast for the February cycle, due to be released later this month, is therefore not likely to be significantly different from that earlier one.
But we cannot be altogether sanguine about it because the level of downside uncertainty in the baseline remains too high for comfort. The drag from Europe has cast a pall over Asia, where growth is slowing dramatically. Tensions with Iran in the Straits of Hormuz over their nuclear program threatens to destabilize oil prices
And finally, the other Washington stayed true to form when it passed only a two month extension of the payroll tax cut. Such short term stimuli have very little long-term impact on consumer spending. Washington’s economy is benefitting from solid performances by aerospace, software and agriculture. But overall growth is being held back by a still stagnant construction sector, and declining state and local government budgets.
A developing risk to Washington comes from the slowdown in growth in Asia. In the past we have noted our below-average exposure to Europe as a relative advantage to Washington as that continent flirts with recession. However, we are much more vulnerable to the slowdown in Asian growth than is the average state
Here is a link to the pdf of the full report.