Friday, March 18, 2011

Latest revenue forecast adds to ‘daunting’ nature of budget-balancing effort

As expected, Thursday’s release of the latest state revenue update confirmed that legislators have more work to do to balance the books on the 2009-11 biennium, and they face even bigger challenges in developing a budget for the next biennium, which begins July 1.
According to Dr. Arun Raha, the state’s chief revenue forecaster, revenue for the remainder of the current biennium is expected to be $80 million less than was forecast in November. That means total projected revenue for the biennium is $28 billion.
For the 2011-13 biennium, revenue is expected to decrease $698 million, resulting in total projected General Fund revenue for that biennium of $31.9 billion.  
Based on the November forecast, Gov. Chris Gregoire in December released a proposed 2011-13 budget that included significant state spending reductions, including a $344.7 million reduction in state General Fund appropriations for higher education.  The Governor proposed partially offsetting those cuts by allowing resident undergraduate tuition to increase by 9 to 11 percent annually, depending on the type of institution. 
Legislators were awaiting the March revenue forecast before announcing their own budget proposal.  Following a briefing on the forecast Thursday afternoon, Rep. Ross Hunter of Medina, chair of the House Ways & Means Committee, wouldn’t predict when the budget proposal would be released.
Raha told the Washington State Economic and Revenue Forecast Council that rising gas prices, uncertainty over the situation in Japan, continuing weakness in the home construction industry, and growth in untaxed online purchases are among the factors contributing to lower revenue projections. 
Hunter declined to speculate on which programs might see further cuts as a result of the new forecast. “The problem has become more daunting,” he said.
The Office of Financial Management issued a news release on the latest revenue forecast.

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