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Washington quarterly revenue projection down $1.9 billion

FOR IMMEDIATE RELEASE—November 19, 2008

OLYMPIA — The November revenue forecast for Washington state government shows projected General Fund revenue down a combined $1.9 billion for the remainder of this biennium and the next two-year budget period.

Dr. Arun Raha, the state’s new chief revenue forecaster, said that the worsening national economy and financial crisis have had a drastic impact on household and business spending. He said the effects of the severe U.S. economic downturn, which is expected to last well into next year, are clearly showing up in Washington’s revenue numbers.

Most economists believe the national recession began at the end of 2007, and since then, the country has lost almost 1.2 million jobs.

“State government is going to have to sacrifice and make hard choices just like Washington families,” Gov. Chris Gregoire said. “But families know, and we know, that tough people always outlast tough times, and together we will emerge stronger from this challenge.”

Gregoire enacted a freeze on hiring, equipment purchases, out-of-state travel and personal service contracts in August in anticipation of the slowdown, saving $90 million this year. She then identified an additional $240 million in savings in October. These actions will save an additional $605 million for 2009–11.

“Our state joins 40 other states across the nation that are in or are facing significant budget shortfalls due to the national economic slowdown,” Gregoire said. “This is why it is critical for Congress to consider a stimulus package that would create jobs and make badly needed infrastructure improvements.”

Revenue for the current budget period, 2007–09, is projected to decrease $502.7 million, resulting in total projected revenue for the biennium of $28.6 billion. Revenue for the next budget period, 2009–11, is projected to decrease $1.43 billion, resulting in projected total revenue of $30.07 billion.

“We are in the process of developing our budget for the next two-year period, establishing priorities and identifying the programs that are most beneficial and effective,” said Victor Moore, director of the state budget office. “We will use the numbers released today to identify which programs we can afford to keep, mindful of the governor’s commitment to not raise taxes or fees.”

The revised forecast creates a $413 million deficit in the General Fund for 2007–09. The Rainy Day Account proposed by Gregoire and passed by the voters in 2007 will contain about $430 million in constitutionally protected reserves.

Moore indicated that the governor is considering two options to close the shortfall for the current budget period: either asking for specific savings in state agencies or by directing across-the-board savings throughout state government.

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