Dear Friends and Neighbors,
As budget negotiations continue, we received some good news today from the Economic and Revenue Forecast Council. The council released our state's latest revenue forecast for the 2011-13, 2013-15 and 2015-17 budget cycles. This is a detailed report on our state's economic performance and its projected impact on tax collections – also known as revenue. This revenue is used to funds our public schools, prisons, state agencies and other programs and services.
The revenue forecast showed our state plans to take in an additional $121 million in tax collections in the 2013-15 budget cycle, and an additional $110 million for the current budget cycle (2011-13). This means state lawmakers have an extra $231 million as they finalize the 2013-15 operating budget – the main issue yet to be resolved in the second special session. Please also keep in mind this is on top of the $2 billion more in revenue our state already plans to collect compared to the 2011-13 budget cycle.
Another state report, the caseload forecast, was also released today. It revealed significant state savings as a result of reduced enrollment in public schools, correctional facilities and social services. This is also a good sign and relieves financial pressures on the next operating budget. It also means the Legislature will have $90 million in revenue that it can re-appropriate for the 2013-15 budget cycle.
Moving forward with a sustainable operating budget, creating jobs
What does this mean moving forward? First, it should finally lay to rest any argument that our state needs tax increases to balance the operating budget. We have enough revenue to properly fund the priorities of government – including a greater investment in K-12 education to meet the expectations of our state Supreme Court's McCleary decision. We should take this extra revenue and dedicate it to our public schools and state reserves.
Secondly and more importantly, the revenue forecast shows our state's economic recovery continues – though not as quickly as anyone would like. While it's easy to get wrapped up in the statistics, it's really about people. There are still too many folks who are out of work, underemployed or fearful they could lose their jobs. Let's hope today's news is an indicator our state's unemployment rate will continue to go down. We know King (4.4 percent) and Snohomish (4.9 percent) counties are heading in the right direction, but counties like Skagit (8.3 percent) continue to lag behind. We need an economic recovery for the whole state. You can find county unemployment rates here.
While sectors of our economy are improving, state lawmakers should still be considering reforms that would strengthen our economy and create jobs. We should always be looking at ways to improve our state's business climate to attract new employers and encourage existing ones to hire. Not enough attention has been paid to this issue this year.
Here are also some highlights from the June Economic and Revenue Update last Tuesday:
- May consumer confidence returned to pre-recession levels.
- Inflation in the Seattle metropolitan area remained moderate in early 2013.
- Housing and construction are improving, but aerospace employment is declining.
- The state's unemployment rate went from 7.5 percent in February, to 7.3 percent in March, to 7 percent in April.
The revenue and caseload forecasts should help state lawmakers as they finalize the operating and capital budgets. I'm optimistic the Legislature can wrap up its business in the next week or so. I look forward to providing you an update when this happens.
In your service,