OLYMPIA — An increase in sales tax revenue that came as people bought more durable goods during the COVID-19 pandemic led to another positive quarterly state revenue forecast Wednesday, with Washington’s economy projected to have about $2.6 billion more that previously assumed through mid-2023.
Updated numbers by the the Economic and Revenue Forecast Council show that projected revenue collections for the 2021-2023 budget cycle are nearly $1.8 billion above what had been originally forecasted in March. And projections for the current budget cycle that ends in a few weeks are now $838 million higher than expected.
Steve Lerch, the chief economist and executive director of the council, noted that since the last update there has been a continued drop in COVID cases, hospitalizations and deaths, increases in employment — both at the national and state level — and a strong residential real estate market.
Nearly a billion of the increase in revenue projection for 2021-2023 came from the sales tax, and Lerch pointed to a jump in people buying recreational goods — like bikes and exercise equipment— cars and other large big-ticket household items.
“One of the things that the pandemic did was really alter patterns of consumption,” he said.
Lerch said that there have been economic concerns since the March forecast, including the increase in inflation, new COVID variants and supply chain issues still being a factor in higher costs of goods.
But the state’s revenue projection through mid-2023 is back to where it was in pre-pandemic levels, a complete turnaround since last June, when numbers warned of a nearly $9 billion shortfall.
Revenues for the current budget cycle that ends mid-2021 are now projected to be $53.2 billion, with an ending balance of more than $3.8 billion, including reserves. And projected revenues for the next two-year budget cycle — which begins July 1 — are projected to be $58.4 billion.
The next state revenue forecast will be in September.