The March forecast by the Revenue Forecast Council offered few changes from the previous forecast. Projections place revenue for the 2011-13 biennium up by $59 million and down for the 2013-15 biennium by $19 million, for a net increase of $40 million. This was better news than had been anticipated by Senate budget writers.
“This news is what it is: a little unexpected, yet welcome,” said Sen. Jim Hargrove, D-Hoquiam, the ranking Democrat on the Senate Ways & Means Committee. “While I am encouraged that today’s forecast shows our economy is starting to grow again, we continue to face serious decisions and difficult choices as we fulfill our ultimate responsibility to protect the public, create jobs and make smart investments in public education. With that in mind, Sen. Hill and I continue to work together to write a budget for the 2013-2015 biennium.”
The March forecast indicates that while consumer confidence in Washington is still flagging, people are spending more money as reflected by an uptick in auto sales. The forecast also shows gains in the housing market and strong exports in the areas of transportation, particularly aerospace.
However, global uncertainty with the European and Chinese economies continues to affect the Washington economy, as does federal fiscal policy and the impacts of sequestration. The forecast assumes the federal budget cuts will continue through June; if sequestration cuts continue past that, economists predicts a loss of $6 million of state revenue per month. Those impacts will be felt most by communities dependent on military bases. In addition, state exports in areas other than transportation are expected to be down.
In the end, budget writers still face an uphill battle to meet the obligations of the Supreme Court’s McCleary ruling to fully fund K-12 education and solve a budget deficit of roughly $1.2 billion. While today’s forecast did little to shrink the scope of that challenge, it did not make an already difficult situation worse.