As Rep. Jim McIntire, D-Seattle, noted at the start of yesterday's revenue forecast, the economy looked like the Olympia weather outside: a little rainy.

Chang Mook Sohn, the state's chief revenue forecaster, says that tax and other revenues are now likely to be $130 million lower than expected -- a big number, yes, but only 4/10 of 1 percent of general-fund revenues -- in the 2007-2009 two-year budget period.

Why? Largely due to less real estate excise tax rolling in. That's what was primarily driving a long string of better-than-expected revenue forecasts over the past three years.

State revenue growth -- a roaring 18.7 percent increase in 2005-07 over the prior biennium -- is now expected to taper off to about 7.6 percent for 2007-2009.

Also, employment growth is slowing, particularly in the construction industry and, to a lesser degree, in aerospace.

Nonetheless, Sohn said, employment is "still very strong" here, growing 3 percent a year while nationwide it's growing at just 1.2 percent. Aerospace, construction, software and professional and business services still remain relatively strong.

All told, the state has gained nearly 240,000 new jobs in the last three years, almost 47,000 of which were in construction.

Sohn said he's not expecting a recession in 2007-2009, although he said that $100-a-barrel oil over the long term would both crimp growth and spur inflation. Still, Sohn said he's expecting oil prices to stabilize at $70-$80.

For details, see here and here.

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