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Spokane, Washington  Est. May 19, 1883
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Washington revenue forecast flat

Uncertainty a major concern

OLYMPIA — Washington’s budget and economic outlook didn’t change much from February, the panel that reviews the state’s finances was told today. For a two-year budget cycle that covers $30.68 billion in expenses, the state is expected to have about $30.7 billion in resources. State Economist Steve Lerch told the Economic and Revenue Forecast Council Washington is experiencing a slow recovery, with about 100,000 fewer jobs now than when the national recession started more than four years ago, but no significant drop from the February forecast. After a series of dismal economic forecasts stretching back to late 2008, some members called that good news. “Stable is good,” Rep. Ross Hunter, D-Medina, chairman of the House Ways and Means Committee and a member of the council said. Barring some major crisis “we will not need to come back into a new special session.” Or, as Sen. Ed Murray, D-Seattle, the chairman of the Senate Ways and Means Committee put it: “It’s not great news, but it’s better news than we’ve seen previously.” But Rep. Ed Orcutt, R-Kalama, the chairman of the council, took a more pessimistic view of the forecast. Some people have been out of work for many months and “I’m worried about how long they can hang on.” Lerch said the state faces several potential problems beyond its control: a recession in Europe, a slowdown in the Asian economy and the “fiscal cliff” facing the United States at the end of the year, when some tax cuts will expire and programs face mandatory reductions unless Congress reaches an agreement on a different solution to the deficit reduction. “Whatever Congress does, it’s going to have an impact,” Lerch said. Jobs in construction and in state and local government are below historic levels, and small businesses remain pessimistic, making them less likely to spend money or hire new employees. There are some bright spots, too, he said. Employment is increasing in aerospace and software publishing is up, exports are growing slowly, and oil prices are starting to come down. New car sales are also up slightly, but that may be because during the recession residents held onto their vehicles longer than normal and now must replace them out of necessity, not just because they want to. The state relies heavily on taxes on consumer spending, from the sales tax on most products other than food and prescription drugs to real estate taxes. Marty Brown, director of the Office of Financial Management, said the state’s current budget, which covers spending through June 30, 2013, was “in the realm of OK” at this point. But the state faces significant added expenses through the rest of this decade on education because of a state Supreme Court ruling. In that ruling, known as the McCleary decision, the court said the state must spend more to meet its constitutional obligation to cover basic education as its paramount duty. That could result in an extra $1 billion in spending in the 2013-15 biennium, $2.5 billion in 2015-17, and $3 billion in 2017-19.
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