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Published on Friday, September 19, 2014

State Releases New Revenue Forecast

This week, the Washington State Economic and Revenue Forecast Council met and released their latest quarterly report which shows very little new revenue to help balance the state’s next biennial budget.

Overall, the forecast added $163 million to the current 2013-15 budget, and an additional $143 million for the next biennial budget, which legislators must write in the 2015 legislative session. This means legislators are expected have about $2.7 billion more available to work with in the 2015-17 biennial budget. This is where differences of opinion emerge. Some legislators believe the state's paramount duty to fund education means that any additional revenue should be devoted to basic education, per the McCleary education funding decision, and an operating budget should be written with the remaining funds. Others feel the underlying budget is experiencing about $2.5 billion in increased expenses, so more revenue will be needed to maintain the current budget and meet the McCleary obligation. This philosophical difference was evident in the question and answer exchange at the end of the Council’s meeting.

The forecast includes some money from the recreational marijuana sales, but how much actually will be generated remains uncertain for the time being. The Council is forecasting $60.1 million for the next biennium.

This forecast was influenced by the nation’s unemployment rate dropping one-tenth of a percent to 6.1%, even though Washington State’s unemployment rate remains unchanged at 5.6%. Additionally, manufacturing is growing faster in Washington compared to the United States as a whole; however, single family construction remains weak, wages remain flat, and the sales tax is not as productive as it has been in the past.

Cities need to be diligent in speaking to legislators this fall about your own challenges, as you prepare your own budgets for next year. Regardless of how lawmakers resolve their differences to produce a new budget, state-shared revenues and city legislative priorities remain at risk.

Categories: State budget
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