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Washington quarterly revenue projection down $167 million

FOR IMMEDIATE RELEASE—June 19, 2008

OLYMPIA— The June revenue forecast for Washington state government shows projected General Fund revenue down a combined $167 million for the remainder of this biennium and the next two-year budget period.

The change in the forecast is less than one-half percent of total General Fund revenue for the two biennia.

"We continue to be in better shape economically than most other states," Gov. Chris Gregoire said. “When the rest of the nation has economic problems, we are affected, too. The Bush administration needs to take swift action to turn around the nation's economy through initiatives that will put people to work and lower gas prices.

"At the state level, I have taken significant steps to improve the economic security for Washington families by providing assistance to those who own a home but are in danger of foreclosure, by helping create 25,000 green collar jobs, and creating training opportunities in high-tech fields for thousands of workers."

Dr. Steve Lerch, the state's interim chief revenue forecaster, said that while the U.S. outlook is a little weaker since February, state business tax collections have been on target. However, real estate excise tax collections continue to be sluggish, reflecting a weak housing market.

"Washington state has a resilient economy — ranked among the best in the nation — in large part due to the wise investments we made in education, health care and public safety that give us a future that is the envy of most states," Gregoire said. "Through these investments and the establishment of a Rainy Day Fund, we’ll keep our state moving forward."

Overall, the U.S. economy is performing close to what was predicted in February, with the exception of oil prices, which reached a record high across the nation. The Federal Reserve appears to be devoting equal emphasis now to maintaining economic growth and containing inflation.

"Since 2005, our state has added more than 220,000 jobs. Although unemployment is up, Washington's annual job growth is 1.3 percent, compared with 0.2 percent nationally, and Washington's delinquent home loan rates are among the lowest in the country," said Victor Moore, director of the state budget office.

Revenue for the current budget period, 2007–09, is projected to decrease $49.6 million, resulting in total projected revenue for the biennium of $29.4 billion. Revenue for the next budget period, 2009–11, is projected to decrease $117.3, resulting in projected total revenue of $31.8 billion.

The revised forecast leaves $359 million in unobligated General Fund revenue for 2007–09. In addition to the budget surplus, the Rainy Day Account proposed by Gregoire and passed by the voters last fall will contain $442 million in constitutionally protected reserves, placing Washington in a much better position than most states to weather the downturn. Nearly 30 states are already experiencing deficits for the current budget period.

Contact: Glenn Kuper, Office of Financial Management, 360-902-7607