Budget Forecast Is Dim, With A Possible $80 million Decrease in Projected Revenue

The state's budget hole appears to threaten to get deeper, with a lowered revenue forecast that reflects a “fragile” economic recovery held back by slow job growth, sluggish construction and now the effects of Middle East unrest and the earthquake and tsunami disaster in Japan.

For the current 2009-2011 budget, revenue is expected to be $28.0 billion, which is $80 million less than the state’s previous projection in November, according to the Economic and Revenue Forecast Council.

And looking ahead to the next two-year budget, which lawmakers are grappling with now, revenues are expected to be $31.9 billion, which is $698 million less than the previous forecast.

And even this latest projection is uncertain because of what’s happening around the globe.

“First, we had the volatility in oil prices because of political unrest in the Middle East,” said Arun Raha, the state’s chief economist, in a statement accompanying the forecast. “Now we have the tragedy in Japan, the world’s third largest economy, and one of the state’s leading trade partners.

“The recovery continues to face other headwinds--slow job growth; a sluggish housing market; tight credit for small businesses; consumer retrenchment after the holidays; and fiscal drag from the federal stimulus winding down, as well as cuts in state and local government expenditures. Boeing’s tanker win will provide an important economic and psychological boost to the Washington state; however the recovery in Washington, as in the nation, is being held back by a weak housing market and sluggish job growth.”

Lawmakers will have to figure out where to make cuts as they deal with the lowered projections. It's not known yet how this will affect local school district's budgets, which have been tightening statewide in recent years.

"It's a forecast, it's not a release of numbers," said spokeswoman Jacque Coe. "It's when the legislature makes decisions with this information, and how they make them. When we know those decisions that's when we know the impact to our budget."

Schools are funded through a combination of state funding and local taxes.

The legislative session is set to run through April 24, though there's some doubt it will wrap up in time.