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State drops revenue forecast by $78 million for current two-year budget

by caprecord

The Economic and Revenue Forecast Council on Wednesday dropped the revenue forecast for the current 2015-17 budget by $78 million, leaving budget writers with less to work with as they prepare their supplement budgets.

Watch revenue forecast here.

This is the first time in two years that the council has decreased its estimate for a current biennium. Economists also estimate the following 2017-2019 budget will fall $436 million short.

The state’s chief economist Steve Lerch said the lower projections are due to a decrease in global and national economic growth.

“We definitely have a weaker economic forecast than we did in November,” he said. “We have slow growth both in the U.S. and Washington.”

He says that the slow national growth has resulted in less consumer spending, a slowdown in housing construction and lower oil and gas spending in Washington.

Economists are also forecasting a $14 million decrease in marijuana sales next biennium. Lerch said that it is in part because Oregon started selling legal recreation marijuana in October.

“It’s really hard to know what the full impact of what’s going on in Oregon will be because we haven’t seen the impact of them actually having fully operational recreational system yet,” Lerch said.

The House’s lead budget writer, Rep. Hans Dunshee, D-Snohomish, voted no to adopt the revenue forecast. Dunshee was disappointed the forecast does not account for the $4 billion estimated for the state to meet its McCleary obligation in funding basic education.

“When I get out my checkbook to make my payments to everything, I don’t ignore the mortgage payment,” he said. “That’s what we are doing right now.”

Senate budget writer Sen. Andy Hill said that McCleary can’t be included because there is no data, but he said that there is “always a $4 billion shortage when you walk in on January.”

“This is my sixth January that I’ve been in Olympia and it’s always been $4 billion,” he said. “And whether it has to do with McCleary or something else its always $4 billion”

Dunshee said the House will release their supplemental budget next week.

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