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State revenue collection ticks up $7.5 million above forecast in July monthly report

Post by Brad Shannon / The Olympian on July 11, 2013 at 2:34 pm with No Comments »
July 11, 2013 6:12 pm
Steve Lerch
Steve Lerch

Washington’s state government revenues held up for another month, ticking $7.5 million higher than the June forecast which had furnished  enough new revenue to let lawmakers settle their differences and pass a budget.

You can see the Economic and Revenue Forecast Council’s full monthly revenue-collections report on June 11 to July 10 collections here. 

The improved revenue comes as state jobless rates are still falling and retail sales are growing, despite slowing job growth overall and a recent decline in aerospace industry jobs. The additional money is actually a blip – amounting to 0.6 percent more than June’s forecast would have predicted for the month.

State forecaster Steve Lerch’s summary of highlights notes several conflicting trends:

• First quarter U.S. GDP growth was revised down from 2.4% to 1.8%.

• U.S. employment grew by 195,000 jobs in June, just above the average monthly increase of 182,000 over the last 12 months.

• June U.S. light motor vehicle sales were at their highest level since late 2007.

• Washington’s employment growth has slowed. • Declining homeowner vacancies show a tightening housing market.

• Preliminary personal income estimate for the first quarter of 2013 was $319.1 billion, $0.6 billion (0.2%) higher than assumed in the June forecast.

• Major General Fund-State revenue collections for the June 11 – July 10, 2013 collection period were $7.5 million (0.6%) higher than the June forecast.

Revenue Act collections were $4.9 million (0.5%) higher than forecasted and non-Revenue Act collections were $2.6 million (0.8%) higher than forecasted.

The report goes on to say monthly tax revenues are growing by more than 5 percent on a year-over-year basis. The retail sector saw tax payments up 10 percent on a year-over-year basis, slightly above the previous month’s rate:

• Year-over-year growth was increased by payments from stores that now sell liquor, with payments from food and beverage stores increasing 24.5% year-over-year and payments from general merchandise stores increasing 11.2%. Excluding food and beverage stores and general merchandise stores, payments from the retail trade sector would have grown by 8.2%.

• Payments from the motor vehicles and parts sector increased by 12.9% year-overyear. Last month, year-overyear payments increased 8.9%.

• Other retail trade sectors that showed strong growth in payments were drug and health stores (+16.0%), furniture and home furnishings (+13.0%), nonstore retailers (+12.0%), building materials and garden equipment (+10.2%) and miscellaneous retailers (+10.1%).

An excerpt of the jobs picture is here:

As in the March forecast, we expect Washington job and income growth to gradually improve throughout the forecast. Washington employment growth has slowed recently. The Washington economy added just 7,100 jobs during the last three months for a 1.0% annual rate of growth. In contrast, Washington employment growth had averaged 2.4% during the previous twelve months.

Manufacturing employment declined 400 from February to May as a result of the loss of 900 aerospace jobs. Outside of aerospace, the manufacturing sector added 500 jobs. Construction employment grew 1,300 during the last three months but government employment remained weak with a loss of 100 jobs. The state’s unemployment rate continued to trend down from 7.5% in February to 7.3% in March, 7.0% in April, and 6.8% in May.

Aerospace employment, which had been responsible for much of the strength in manufacturing during the recovery, is now in decline. From May 2010 through November 2012, the aerospace sector added 17,200 jobs. As of May 2013 it has lost 1,700 jobs since the peak. We believe that this downturn will be relatively mild due to the large backlog of orders. The current reductions are due to improvements in productivity. The steep cuts in the past have been associated with production cuts, which we do not expect over the next few years.

A version of this story is being prepared for Friday’s print editions.

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