Washington Quarterly Revenue Projection Down $423 million
FOR IMMEDIATE RELEASE—February 15 , 2008
OLYMPIA—The February revenue forecast for Washington state government shows projected General Fund revenue down $423 million for the current two-year budget period.
“Although our economy is outperforming the rest of the nation, it is clear from this forecast that national trends can have an effect here,” Gov. Chris Gregoire said. “When the rest of the nation has economic problems, it affects us, too.”
Dr. ChangMook Sohn, the state’s chief revenue forecaster, said the predicted revenue change was due to clear signs that the U.S. economy is slowing down. The U.S. downturn is led by continuing problems in the real estate sector, high gas prices and other challenges facing consumers. According to Sohn, Washington should fare much better than other states during this downturn, but no state is totally immune. Sohn noted that the change in the forecast is less than 2 percent of total General Fund revenue for the 2007–09 biennium.
“Given the expected decline in revenue, I have been meeting with Senate Majority Leader Brown and House Speaker Chopp to discuss the effect this will have on budget planning,” Gregoire said. “We must maintain a prudent reserve while also protecting the critical investments we have made in education, health care and economic development that put us on strong footing for economic growth Washington state.”
The national economic picture is in stark contrast to the continued strength in Washington’s leading industries, especially aerospace and software, which is helping insulate Washington from the worst effects of the U.S. slowdown.
“The economy in Washington stands on solid ground,” said Victor Moore, director of the state budget office. “Job growth in Washington continues to outpace the national average and Washington had the highest increase in personal income in the nation for the third quarter of 2007. The strength of our export economy will keep us growing.”
Revenue for the current budget period, 2007–09, is projected to decrease $423 million, resulting in total projected revenue for the biennium of $29.5 billion.
The revised forecast leaves $524 million in unobligated General Fund revenue for 2007–09. In addition to the budget surplus, the Rainy Day Account proposed by Gov. Gregoire and passed by the voters last fall will contain $429 million in constitutionally protected reserves.
In addition to updating the outlook for the current budget period, the Forecast Council provided the first look at economic and revenue prospects for the next biennium, 2009–11. Sohn predicted General Fund revenues of $31.9 billion, or about 5 percent per year growth, which is close to the historical average.
Contact: Glenn Kuper, Office of Financial Management, 360-902-7607