Washington quarterly revenue projection down
Fiscal prudence and Rainy Day Fund leave state prepared for economic slowdown
FOR IMMEDIATE RELEASE—September 18, 2008
OLYMPIA— The September revenue forecast for Washington state government shows projected General Fund revenue down a combined $529 million for the remainder of this biennium and the next two-year budget period.
The revised forecast leaves $86 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.
Dr. Steve Lerch, the state’s interim chief revenue forecaster, said even though some of the worst financial risks are being addressed by the Federal Reserve and Congress, consumers have been hit hard by bad news, and they remain extra cautious. This influences spending and tax collections.
“The national economic slowdown is clearly affecting Washington’s economy,” Gov. Chris Gregoire said. “We anticipated this decrease and we are better prepared to weather this storm because of fiscally responsible initiatives such as the Rainy Day Fund and adjustments to spending over the past few months.
“As a result of the continued slowing of the national economy, I am taking action to reduce spending now. I am directing the Office of Financial Management to locate additional budget savings of $200 million, without affecting vital programs,” Gregoire said. “These savings will put us in a position to weather the slowdown and protect critical investments.”
Gregoire enacted a freeze on hiring, the purchase of equipment, out-of-state travel and personal service contracts last month. These steps alone are expected to save $90 million this biennium. The governor has also directed state agencies to reduce energy usage and nine agencies and offices to experiment with a four-day work week.
“The current financial turmoil is more evidence of the federal government’s mismanagement of the financial system, which has enabled the current economic slowdown to continue,” Gregoire said. “Fortunately, in Washington state we’ve taken steps to police lenders, and we will continue diligently to protect consumers.”
Revenue for the current budget period, 2007–09, is projected to decrease $273 million, resulting in total projected revenue for the biennium of $29.1 billion. Revenue for the next budget period, 2009–11, is projected to decrease $256 million, resulting in projected total revenue of $31.5 billion.
“As we begin building our budget for the next two-year period, we are using the Priorities of Government process to identify the programs that are most beneficial and effective,” said Victor Moore, director of the state budget office. “We remain committed to our key priorities — education, health, economic development and safety.”
Contact: Glenn Kuper, Office of Financial Management, 360-902-7607