Not All Bad News in Latest State Economic and Revenue Update

Yesterday's release of the monthly economic and revenue update (aka revenue collection reports) was decidedly less bleak than the two previous reports. Which is not to say it was unmitigatedly upbeat.

These reports now discuss national and state economic trends, along with the routine report of revenue collections. Here's the crux of the state trend:

The freefall in the Washington economy appears to be abating. Initial claims for unemployment insurance appear to have peaked and monthly job losses are moderating. Still, the state’s economy lost 9,900 net jobs in April of which 3,000  were in construction and 3,800 were in manufacturing. Job losses are expected
to continue through the end of this year but the rate of loss will continue to slow. Employment growth is expected to turn positive in Washington as well as in the U.S. in early 2010.

And revenue collections were higher than forecast. But with a significant caveat.

Major General Fund-State revenues for the May 11 – June 10, 2009 collection period were $91.3 million (6.7%) higher than our March forecast, due almost entirely to a $161.5 million positive variance in property tax collections.  Consequently, cumulative total collections are just $4.9 million (0.2%) below the March forecast.  It is very likely, however, that most of the property tax variance was due to a reater-than-normal portion of taxes being paid by the April 30th due date.  Since we have an estimate of the total levy, we expect June property tax receipts will fall short by an amount similar to this month’s positive variance (see figure).  If property tax receipts had come in as forecasted, the cumulative shortfall would have been$166.5 million (5.3%).

I read that to mean we're still down about $167 million. With just week's left in the biennium, that's primarily important for how it reduces the beginning balance for the next budget cycle. Next week's revenue forecast will lay out more detail and probably be down a bit to reflect actual collections experience and a slight dampening of expectations.

Adam Wilson has more in his Olympian blog, noting the $1.23 billion decline in year-to-year general fund revenues.