Planning & Budgeting

November 20, 2020

November Revenue Forecast Shows Continued, but Cautious, Growth

The COVID-19 pandemic has drastically changed the economic outlook in Washington state. The June Revenue Forecast, released by the Economic and Revenue Forecast Council (ERFC), forecasted a precipitous economic decline as a result of the full shutdown in spring and early summer. Fortunately, the September Revenue Forecast and the November Revenue Forecast, released Wednesday, have shown a significant recovery from June estimates. More background on the state revenue forecast is available here.

It is important to note that it is unclear if this revenue forecast will fully account for the impacts of the most recent “wave” of COVID cases, and the economic restrictions that were enacted on November 16 as a result. Given that we cannot be sure how long the heightened cases and associated restrictions will be a reality, it is difficult to determine the full economic impact.

Compared to the September forecast, the November General Fund-State (GF-S) revenue forecast has been increased by $607 million in the 2019-21 biennium, $297 million in the 2021-23, biennium, and $16 million for the 2023-25 biennium.

Despite the promising forecasts detailed in the most recent reports, the GF-S forecast is still significantly lower than what we saw in the February, pre-COVID forecast. The November GF-S forecast is $1.8 billion lower than the February 2020 forecast for the 2019-21 biennium, $1.8 billion lower for the 2021-23 biennium, and $2.0 billion lower for the 2023-25 biennium. As a reminder, the February forecast was what was used to amend the current 2019-21 biennial state budget.

Here is a quick summary of the total projected Near General Fund-State (Near GF-S) revenue for each biennium. As a reminder, Near GF-S includes revenue from the Education Legacy Trust Account (ELTA), Workforce Education Investment Account (WEIA), and Opportunity Pathways Account (OPA).

  • $50.995 billion for the 2019-21 biennium, 10.7 percent over the expected 2017-19 biennium.
  • $54.666 billion for the 2021-23 biennium, 7.2 percent over the expected 2019-21 biennium.
  • $58.007 billion for the 2023-25 biennium, 6.1 percent over expected 2021-23 biennium.

Some context behind the numbers:

  • Cumulative major General Fund-State (GF-S) revenue collections from September 11 through November 10, 2020 came in $380 million above the September forecast.
  • Forecasted revenue dedicated to the Workforce Education Investment Account (WEIA) was increased by $5 million in the 2019-21 biennium and $4 million in the 2021-23 biennium. The forecast was decreased by $4 million in the 2023-25 biennium. Forecasted WEIA revenue is now $343 million for the 2019-21 biennium and $605 million for the 2021-23 biennium.
  • Forecasted Education Legacy Trust Account (ELTA) revenue for the 2019-21 biennium increased by $19 million, due mainly to higher Real Estate Excise Tax (REET) receipts. The forecast for the 2021-23 biennium increased by $22 million and the forecast for the 2023-25 biennium increased by $14 million, due to increases in both REET and estate tax forecasts. Forecasted ELTA revenue is now $1.554 billion for the 2019-21 biennium and $1.262 billion for the 2021-23 biennium.

The Governor will use these November forecast revenue estimates when crafting his proposed 2021-23 biennial operating budget, which will be released in December. The Governor’s budget release is the first step in the budget process for the upcoming 2021 legislative session, which begins on January 11 and lasts 105 days. An additional revenue forecast in March will guide legislative leadership as they develop budget proposals during the session.

Stay tuned to the OPBlog for updates on the impact of the COVID-19 pandemic, and the upcoming 2021 legislative session!