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November revenue forecast down $760 million

Governor says all options to balance budget on table


OLYMPIAThe November revenue forecast for Washington state government shows projected General Fund revenue down $760 million for the remainder of this biennium, which ends June 30, 2011. The figure was released today by the Washington State Economic and Revenue Forecast Council.

Dr. Arun Raha, the state’s chief revenue forecaster, said that “while the economy is improving as expected, much of the impetus has come from federal government spending, rather than consumer spending. State revenues suffer when consumers hold back. The change in the revenue forecast is due mainly to a revised estimate of when households will regain the confidence to spend on the goods and services that are subject to state taxes.” 

Gov. Chris Gregoire signed a balanced budget in May to close a nearly $9 billion shortfall. That budget left a total of $739 million in savings, with $250 million in the constitutionally protected Rainy Day Fund and $489 million in unobligated revenue.

“Since the Legislature left in April, our revenues have continued to decline,” Gregoire said. “Our projected shortfall for the remainder of the biennium is an additional $2.6 billion, for a total gap this two-year budget period of $11.6 billion. That’s almost a third of our last budget. We have not seen a shortfall like this in 80 years.”

In June, Gregoire directed state agencies to further curtail their spending for the 2009–11 biennium. She required agency directors to place a cap on hiring, reduce General Fund employee costs by 2 percent from the budgeted amount, and curb equipment purchases, out-of-state travel and personal services contracts. She also asked that higher education and separately elected officials voluntarily follow her hiring and purchasing directives.

Gregoire and her budget staff are currently preparing a supplemental budget to be proposed in December.

“I will produce a budget balanced to this revenue projection because I am required to by law,” Gregoire said. “We all know a budget reflects the values of our state. All options must be on the table to produce a budget that works.”

Revenue for the current budget period, 2009–11, is projected to decrease $1.68 billion, resulting in total projected General Fund revenue for the biennium of $30.9 billion. This leaves $235.7 million in the Rainy Day Fund.

“It’s clear that the supplemental budget will need to contain very deep cuts,” said Victor Moore, director of the state’s budget office. “Before this forecast, we already were facing a shortfall of $2 billion, with two-thirds of it due to declining revenues. Washington is not alone: 48 states are facing the same problems. But we are limited in our options to cut. The supplemental budget we will release next month will be extremely ugly, a reflection of the unprecedented magnitude of our budget dilemma.”

The Office of Financial Management has prepared a report on the state’s budget, available at

Contact: Kate Lykins Brown, Office of Financial Management, 360-902-0619