OLYMPIA -- Washington's revenue forecast was up just slightly for the rest of this biennium, and through the next two-year budget cycle, a state panel was told this afternoon.

On the upside, construction is improving and employment should slowly rise, although it won't get back to pre-recession levels until sometime in 2014. On the downside, manufacturing is off a bit and so are exports except for airplanes, state economist Steven Lerch told the Economic and Revenue Forecast Council.

Bottom line, the state can expect to collect $30.469 billion for 2011-13, which is up about $29 million from last June's forecast; it can expect to collect $32.649 billion for 2013-15, up about $22 million from that previous forecast. It can expect $35.5 billion in 2015-17, the first time forecasters have looked out that far.

The biggest risks -- economic slow down in China, problems in the Eurozone and the federal government's willingness to consider across-the-board cuts -- are all outside the state, Treasurer Jim McIntire said.

In recent years, some forecasts have been so bad that they prompted calls for special sessions of the Legislature and calls for deep cuts or new taxes. This time, legislators on the council were willing to wait until January, and the regularly scheduled session that will follow the election.

There's still a shortfall of about $1 billion the next Legislature will need to close, Lerch said. Or about $500 million if it uses up the reserve funds.

It's clear the economy isn't going to grow fast enough to provide revenue needed for things like education improvements being ordered by the state Supreme Court, Sen. Ed Murray, D-Seattle and the chairman of the Senate Ways and Means Committee said.

But the Legislature can look at the next forecast, due out in November, and look for some adjustments through the end of June that would add to the reserves, Rep. Ed Orcutt, R-Kalama, the chairman of the council said.

Sen. Dino Rossi, R-Sammamish, who was recently appointed to the Legislature and the council to fill vacancies, said the biggest problem with the economy is that Washington needs to become "a business-friendly state" to attract businesses and jobs.

"Many of the problems in the budget are self-inflicted," said Rossi, who chaired the Ways and Means Committee during his previous tenure. Medicaid will be a big drain in a few years because Democrats "have swallowed Obamacare hook, line and sinker."

Murray defended the current budget, which he helped author. All budget writers face the same problems and wrestle with the same tough choices, he added: "It's unfortunate this forum is degenerating into a campaign forum."

"Facts are stubborn things," replied Rossi.

"So is history," countered Murray.

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