Revenues Down Slightly, Shortfall Pegged at $2.8 Billion

This morning's revenue forecast, as we predicted in the morning WashACE briefing call, came in pretty close to the November estimate.  Nonetheless, coupled with the caseload forecast earlier this week, it brought a second dose of bad news to lawmakers desperately seeking good news.

The February 2010 General Fund-State forecast for the 2009-11 biennium is $28.7 billion, which is $118.2 million less than expected in November only because of a $149.7 million reduction due to noneconomic factors, mainly the DOT Foods Supreme Court decision. Excluding the noneconomic factors, the forecast is up by $31.5 million. This is the first forecast to extend through the 2011-13 biennium. The General Fund-State forecast for the 2011-13 biennium is $32.2 billion.

(The DOT Foods decision has prompted House Democrats to propose a "loophole closure," as we noted earlier.)

Combining a $96 million increase in costs with a $118 million decrease in revenues yields a $200 million increase in the state's estimated budget shortfall.

Stories in the Spokesman-Review and Seattle Times.

P.S. Add the Chronicle to the list of papers unhappy with the I-960 suspension.

What now? Expect plenty of tax increases across the board, with token budget cuts that won’t address a state government that has grown too large and is too beholden to unions — the real strength behind the current power structure in Olympia.

...Tax increases, as being pushed in Olympia on all fronts, can cause real damage to an economy. We believe the private sector — the taxpayer — would spend those dollars more responsibly than a state bureaucrat. We believe raising taxes during a recession is the exact opposite of what our state leaders should be doing.

P.P.S. And The News Tribune cautions legislators not to misread the school levy elections results.

Some legislators might be tempted to conclude that the levy successes reflect a general receptiveness toward broad new state taxes. A close look at the actual levy campaigns points in the opposite direction.

In this region, school supporters stressed the idea that the levies wouldn’t raise taxes – that the measures would simply renew taxing authority previously approved by the voters.

...There’s also the fact that citizens make a clear distinction between local taxes they impose on themselves and statewide taxes imposed on them from Olympia. ...

Whatever else Tuesday’s election results mean, they don’t suggest that the public wants to see the Legislature squeeze more blood out of the distressed private sector – and possibly hurt the recovery in the bargain.

Well said.