It almost escaped public attention last week in the fight over an estate tax: The Economic and Revenue Council’s latest monthly tax-collections report showed continued gains for the Washington state treasury. The report showed the cumulative revenue gain exceeding the March forecast is just over $126 million – or about $94 million when certain adjustments are made to adjust for one-time factors and blips.
If the Tuesday morning [tomorrow] forecast actually assumed that bullish monthly gain of $30 million to $40 million for two years, it would seem to offer the Legislature a golden pot of hope, enough to end all the tax-and-spend bickering that is holding up a budget deal, right?
Well, it turns out neither the House Democrats nor Senate Republicans are expecting such a windfall from either the revenue forecast due at 10 a.m. – or from the caseloads report that follows at 1:30. The caseloads report helps calculate how much government is going to cost over two years by telling how many kids are expected in K-12 schools, how many poor or disabled adults are to be on Medicaid, how many families need welfare assistance, and how many people of any age might be behind bars.
Senate Majority Leader Rodney Tom said last week that he thought the news may be up a bit and that it could help resolve differences between the Republican Senate, which is locked into an anti-tax stance if it can’t get business-friendly reforms, and the Democratic House, which still wants to close some tax exemptions and cut less from social programs that help the poor.
“There’s a consensus it’s going to be up,” Senate Ways and Means chairman Andy Hill, R-Redmond, told my reporting partner Jordan Schrader this morning. “The question is how far up it’s going to be.”
House Appropriations chair Ross Hunter, D-Medina, hasn’t offered a public prediction but has told his own people that the net financial gain from the caseloads and revenue reports may be a third of what he’s been hearing from some optimists – in other words, $100 million or less.
One interesting development in revenue collections over recent months is that the real estate excise tax is driving a bit of the improvement – about $34 million of the gains since March. Real estate kept state collections surging back in 2005-07.
Big real estate deals totaling more than $500 million helped drive some revenue growth in the last month, but so did a strengthening residential sales market according to the forecast council’s tax collections report, which noted the March revenue forecast had expected lower commercial sales due to federal tax changes at the end of 2012.
There also was some new strength in sales of trucks and cars and retail sales receipts were trending well on a year over year basis.
The news on the jobs front is shaping up as mixed – with job growth in April falling well short of the March forecast. Aerospace jobs are now in decline, manufacturing was down, but construction was up higher than expectations in the early spring and the state’s overall jobless rate fell from 7.5 percent in February to 7 percent in April.
We’ll all know a lot more Tuesday when the state’s top economic forecaster Steve Lerch lays out his case.