Planning & Budgeting

September 24, 2020

September Revenue Forecast Shows Promising Recovery

The COVID-19 pandemic has drastically changed the economic outlook in Washington state. Fortunately, September Revenue Forecast, released yesterday by the Economic and Revenue Forecast Council (ERFC), details modest growth. This stands in stark contrast to the June Revenue Forecast, which forecasted a precipitous economic decline as a result of the full shutdown throughout spring and early summer.

The September GF-S revenue forecast has been increased by $2.1 billion in the current biennium and $2.2 billion in the next. The forecast of GF-S revenue for the 2023-25 biennium has increased by $2.5 billion. This still leaves the GF-S forecast $2.4 billion lower than the February 2020 forecast for the current biennium, $2.1 billion for the next biennium and $2.0 billion for the 2023-25 biennium. Importantly, the February forecast was used as the basis for the current biennial budget, so the state is effectively facing a $2.4 billion deficit in FY21 that will need to be resolved. The September forecast, however, is a drastic improvement from the nearly $9 billion total deficit forecasted in the current and next biennia in the June Revenue Forecast.

Forecasted GF-S revenue is now $48.189 billion for the current biennium and $52.181 billion for the 2021-23 biennium. Forecasted GF-S revenue is $55.917 billion for the 2023-25 biennium.

Here is a quick summary of the total projected Near GF-S revenue for each biennium:

  • $50.022 billion for the 2019-21 biennium, 8.6 percent more than the 2017-19 biennium
  • $53.737 billion for the 2021-23 biennium, 7.4 percent more than the 2019-21 biennium
  • $57.28 billion for the 2023-25 biennium, 6.6 percent over expected 2021-23 biennium

More background on the state revenue forecast is available here. Some context behind the numbers:

Washington state:

  • Cumulative major General Fund-State (GF-S) revenue collections from June 11 through September 10, 2020 came in $963 million above the June forecast. Although these collections were above the June forecast, collections for February 11 through September 10 were $840 million less than forecasted in February.
  • Forecasted revenue dedicated to the Workforce Education Investment Account (WEIA) was increased by $17 million in the 2019-21 biennium and $30 million in the 2021-23 biennium. Forecasted WEIA revenue is now $339 million for the 2019-21 biennium and $601 million for the 2021-23 biennium. Forecasted WEIA revenue for the 2023-25 biennium is now $700 million
  • Forecasted Education Legacy Trust Account (ELTA) revenue for the 2019-21 biennium increased by $164 million, due to both higher real estate excise tax receipts and higher estate tax receipts. The forecast for the 2021-23 biennium increased by $149 million and the forecast for the 2023-25 biennium increased by $125 million. Forecasted ELTA revenue is now $1.535 billion for the 2019-21 biennium and $1.241 billion for the 2021-23 biennium. Forecasted ELTA revenue for the 2023-25 biennium is $1.041 billion.
  • Employment continued to rise in June, July, and August following the historic decline in March and April. As of August, the state’s economy has recovered nearly half the jobs lost in March and April.

Given the promising numbers in this revenue forecast, we do not anticipate a special legislative session before the regularly scheduled 2021 session. The Governor will use the November forecast revenue estimates when crafting his proposed 2021-23 biennial budget proposal. Stay tuned to the OPBlog for updates on the impact of the COVID-19 pandemic, and the upcoming 2021 legislative session!