Washington’s quarterly revenue projection up by $959.5 million
FOR IMMEDIATE RELEASE - June 15, 2006
OLYMPIA – The June revenue forecast for Washington State government shows projected General Fund revenue over the next three fiscal years is up by $959.5 million.
For the last year of the current 2005-2007 two-year budget cycle, the forecast shows revenue rising by $523.9 million from the last quarterly forecast in February. For the coming budget biennium, beginning July 1, 2007, the new forecast shows revenue up by another $435.6 million.
Dr. Chang Mook Sohn, chief state revenue forecaster, said his latest quarterly projection reflects exceptionally strong revenue growth since the last quarterly forecast in February. Although housing activity, the primary driver of the state’s economic surge for the past two years, is slowing down, real-estate construction and sales are still stronger than was forecast in February. The higher economic base and momentum from the current biennium translates into higher projected personal income and revenue for the state in next budget period as well, Sohn said.
The state’s chief economist warned, however, that downside risks to the forecast are very real due to higher oil and gas prices, continuing instability in the Middle East, rising consumer debt, and higher inflation, which makes it more likely that the Federal Reserve will raise interest rates.
Governor Chris Gregoire said she was pleased, but agreed with Sohn that the new forecast must be viewed with caution.
"Since I took office, our economy has grown stronger and this forecast, along with tremendous job creation over the last few years, is more proof of a robust economy," Governor Gregoire said. "I remain committed to getting the state off the roller-coaster of spending in good times, only to put ourselves in the hole when the economy turns down. That is exactly why we put away over $940 million this year for future spending. We do face large and competing needs and must continue to be smart and accountable with every public dollar."
“The new forecast eases the task of writing a new two-year budget proposal, a process we have already started,” added Victor Moore, director of the Governor’s budget office. “But as usual, we will propose expenditures based on what our citizens need the most.”
For the 2005-2007 budget biennium, the new forecast leaves $1.485 billion in general fund and other reserves.