OLYMPIA — As lawmakers prepare to unveil their supplemental budget proposals next week they received good news Thursday about state revenue projections that look to increase by about $1.3 billion more than expected through 2021.
The numbers released by the Office of Financial Management at a meeting of the Economic and Revenue Forecast Council showed that since the last revenue forecast in November, overall state revenues increased by nearly $628 million for the current two-year budget that ends mid-2019, putting it at nearly $45 billion. Officials say it’s the largest quarterly increase for the state since before the 2008 recession.
The projections for the next two-year budget that ends in mid-2021 also increase, by nearly $660 million, pushing the state budget up to $49.1 billion.
Steve Lerch, the revenue council’s executive director, said that several things were at play in this forecast.
“I think it’s due to consumer confidence, that employment has been growing, the state’s economy has been doing very well,” he said. “The federal tax changes would be a second piece because that does increase after tax income. We assume that a chunk of that will be spent on things that are subject to the sales tax.”
The numbers are good news for lawmakers who have been ordered by the state Supreme Court to expedite the timeframe to pay for the teacher and staff salary portion of a plan passed last year to fully fund basic education.
The Senate on Wednesday night passed a measure that seeks to do that, and the spending plans proposed by majority Democrats in the House and Senate to pay for any plan to comply with the court will be released next week.
“This news allows us to stay our course in terms of the direction that the Senate Democrats were heading with the budget,” said Democratic Sen. Christine Rolfes, the Senate’s key budget writer.
She said that the additional revenue means they can comply with the court ruling on education, as well as other mandates related to mental health.
“Our direction was to comply with all of our federal and state court mandates without raising taxes,” she said. “And I think we’re in a position now to be able to lower them, at least temporarily.”
Lawmakers hope this session is when they’ll lose contempt of court status in their multiyear effort to fully fund basic education. The court ruled that while a plan passed by the Legislature last year — a phased in property tax shift — was in compliance, lawmakers are still not on track to meet this year’s fall deadline of full funding because full implementation doesn’t occur until the 2019-2020 school year.
The court has given lawmakers this session to expedite that timeframe for putting about another $1 billion to fully pay for salaries.
Lawmakers on both sides of the aisle are hoping that the new forecast means they can give some tax relief to residents who are seeing property tax increases as a result of last year’s action. Leaders in both the House and Senate say they will unveil plans on measures soon.
Republican Rep. Dan Kristiansen, the House minority leader said that while the revenue forecast was good news, lawmakers should be cautious in how they spend the money.
“I want to make sure the decisions we’re making are sustainable,” he said.
The current 60-day legislative session is set to end March 8.
