SAN FRANCISCO — Washington’s official economic forecaster sliced $760 million from the state’s revenue outlook yesterday, citing a “revenue-less recovery.”
“Unemployment is high and growing, consumer confidence is weak, and credit remains tight,” Arun Raha, executive director of the state’s Economic and Revenue Forecast Council, said yesterday while presenting his forecast to the council.
The council is charged with providing impartial revenue projections that state decision makers use to develop the budget.
Its new forecast for general fund revenue during the state’s 2009-11 budget biennium is $28.8 billion, down $760 million from its September forecast.
Of the $760 million decrease in the forecast, $97 million stems directly from a shortfall in collections during the last two months, while the remaining $663 million is from a lower forecast for taxable activity during the reminder of the biennium.
Washington, which does not have an income tax, relies heavily on sales taxes for state revenue.
Since February 2008, the forecaster has shaved $5.3 billion, or more than 15%, from the state budget forecast.
“It is a testament to the gut-wrenching crisis the economy has been through and from which it is yet to recover,” Raja said.
Taxable sales won’t recover until unemployment starts to ease, Raja said, but he said he expects the state unemployment rate to keep rising until the spring, when he expects it to reach 9.8%. It is currently 9.3%.
The process earlier this year of adopting the current biennium budget was already difficult. Although Democrats hold solid majorities in both houses as well as the governor’s office, they went through a long internal debate before adopting a budget balanced without tax increases, relying instead on program cuts and federal stimulus money.
With the latest grim forecast, lawmakers will be faced with even more budget adjustments when they return for the two-month session that starts in January.
Gov. Christine Gregoire has already indicated no plans to call a special budget session before that, despite calls from minority Republicans.
“It’s getting to be kind of numbing the amount we have to climb here in terms of finding budget reductions,” Victor Moore, the state’s director of financial management, told the media after the new forecast was announced.
Washington’s general obligation bonds carry underlying ratings of AA from Fitch Ratings, Aa1 from Moody’s Investors Service, and AA-plus from Standard & Poor’s.