WA state revenue forecasts predict slowdown as lawmakers prepare new spending plans
Over the next two years, Washington State is likely to bring in less revenue than previously expected, according to the latest revenue forecast officials released Monday. But lawmakers say it's cause for caution, not necessarily concern.
During a presentation with legislative budget leaders, the Washington State Economic and Revenue Forecast Council's chief economist Steve Lerch said there are several factors behind the latest numbers, which are roughly $480 million below what was projected in November.
"We've got slightly lower Washington personal income, that of course is a big driver of spending activity and sales tax and B&O revenue,” Lerch said. He also noted higher interest rates and lower than expected real estate excise tax collections played a major part in the diminished forecast numbers.
The state predicts revenue will reach a little more than $65 billion over the next two years. But the council's forecast calculations do not include income from the state's carbon emissions auctions. The first auction in February generated roughly $300 million.
The news comes just as lawmakers begin releasing their budget proposals for the state's next two years of spending.
Senate Ways and Means Committee Chair Christine Rolfes (D-Bainbridge Island) said overall, it's a manageable change.
"This news makes us cautious but it doesn't really change our game plan that much," Rolfes said.
Rolfes' House counterpart, Appropriations Committee Chair Timm Ormsby (D-Spokane), said the forecast affirms lawmakers' efforts to carefully craft the next state budget while still addressing critical needs.
"This forecast kind of validates our guarded approach as being the correct one," he said. "We should be very deliberate, make careful steps to ensure that the budget decisions we're making still protect the most vulnerable."
The lower forecast was also expected, said Sen. Lynda Wilson (R-Vancouver), the ranking Republican on the Senate Ways and Means Committee.
"We shouldn't be surprised that we're in the midst of a slowdown," Wilson said. "It is clear though, that we are fine right now in our budget."
Wilson and other Republicans say the slowdown is not enough to warrant new or increased taxes. Instead, they say the state shouldn't spend as much over the next four years and should even look for opportunities to lower taxes.
"It's a question of spending – are we going to continue to ratchet up spending or are we going to stay on more of a consistent trajectory and maybe give taxpayers a little bit of relief?" said Rep. Ed Orcutt (R-Kalama).
Lawmakers in the Senate will continue rolling out their budget proposals later this week, followed by House lawmakers next week. The two chambers will then negotiate a final spending plan to send to the governor's desk before the session ends next month.