Legislators and Olympia insiders have been anxiously awaiting the numbers to understand exactly how large the budget problem for 2011-13 will be. Up until today the problem has been defined as $4.6 billion. Today, based on the latest forecast, that number grew to about $5.4 billion.
Our chief economist, Dr. Arun Raha, newest prediction is another $698.4 million less than predicted in November. The amount of state revenue anticipated for the 2011-13 biennium is $31.9 billion.
At the council meeting, our state's chief economist, Dr. Arun Raha, made the following statements:
- There is still a high degree of uncertainty associated with this forecast due to the tragedy in Japan and the political unrest in the Middle East. Raha was unable to pinpoint what the cost to our state will be but mentioned agriculture exports will be affected immediately.
- Gas prices are rising. The forecast assumes higher prices - if oil is $20 per barrel above the assumptions in the forecast, next biennium’s forecast would go down by another $196 million.
- Construction employment is still a drag on the state’s economy – construction contributes greatly to overall revenues.
- Online sales have been growing causing even more leakage in the state’s revenues. The Department of Revenue estimates we will lose $740 million in revenue in 2011-13.
- This forecast assumes the Boeing tanker deal. However, the bulk of the impact won’t be seen until after next biennium.
So, together, the total revenue loss is $778.2 million. Fortunately, last week's caseload forecast predicted about $300 million fewer in future caseload costs (fewer children in school, fewer inmates, etc). That brings the total budget problem closer to $5.1 billion, the number cited by the head of the Governor's budget office, Marty Brown, at today's forecast meeting
You can view the materials from today's forecast meeting here.
