Planning & Budgeting

September 29, 2021

September Revenue Forecast Shows Overall Continued Economic Growth

Overview

The Economic and Revenue Forecast Council (ERFC) released their September revenue forecast on September 24. The last revenue forecast, released in June, showed promising signs of a full economic recovery. At that time, the number of COVID-19 cases in Washington state was declining. However, as noted in our previous blog post, risks remained and our post cautioned that more infectious COVID-19 variants could emerge. Over the last three months, the COVID-19 Delta variant has surged through Washington state, with average-daily case totals and hospitalization rates surpassing the previous three waves. Despite this challenge, the September revenue forecast showed overall, continued economic growth. While the latest forecast does show a revenue shortfall in the 2019-21 biennium, the Council did also increase revenue totals in the current biennium (2021-23) by nearly a billion dollars ($927 million). This is encouraging news as we approach the upcoming legislative session.

Before we dig into the numbers, more background on state revenue forecasts is available here.

General Fund-State

Per the September revenue forecast, the preliminary total of General Fund-State (GF-S) revenue for the 2019-21 biennium, which ended June 30, 2021, is $45 million lower than forecast in June. The shortfall was due to both an underperformance in Revenue Act taxes (including retail sales and use, business and occupation, public utility, and non-cigarette tobacco products) in May activity and a higher-than-expected amount of those taxes arriving too late to be tabulated before the end of the fiscal year. However, those late taxes subsequently added to revenues for the current biennium (2021-23). The GF-S forecast has been increased by $845 million in the 2021-23 biennium and $891 million in the 2023-25 biennium. The preliminary total of GF-S revenue for the 2019-21 biennium is $50.803 billion. Forecasted GF-S revenue is now $56.457 billion for the 2021-23 biennium and $59.870 billion for the 2023-25 biennium.

Near General Fund-State

As a reminder, Near GF-S includes revenue from the GF-S, the Education Legacy Trust Account (ELTA), Workforce Education Investment Account (WEIA), and Opportunity Pathways Account (OPA). Summing the changes to the Near GF-S forecasts, total state revenue subject to the budget outlook process was $40 million lower than expected in the 2019-21 biennium. Forecasted revenue has increased by $927 million in the 2021-23 biennium and $931 million in the 2023-25 biennium.

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

  • $53.132 billion for the 2019-21 biennium, 15.3 percent higher than the 2017-19 biennium.
  • $59.341 billion for the 2021-23 biennium, 11.7 percent over the expected 2019-21 biennium.
  • $63.082 billion for the 2023-25 biennium, 6.3 percent over the expected 2021-23 biennium.

Some context behind the numbers for Near GF-S accounts from which the University receives funding:

  • The preliminary total of revenue dedicated to WEIA in the 2019-21 biennium is $352 million, $5 million lower than the June forecast. Forecasted revenue has been increased by $8 million in the 2021-23 biennium and $9 million in the 2023-25 biennium. Forecasted WEIA revenue is now $668 million for the 2021-23 biennium and $737 million for the 2023-25 biennium.
  • The preliminary total of ELTA revenue for the 2019-21 biennium is $1.639 billion, $9 million higher than the June forecast. The forecast was increased $73 million in the 2021-23 biennium and $31 million in the 2023-25 biennium, due mainly to increases in REET. Forecasted ELTA revenue is now $1.866 billion for the 2021-23 biennium and $2.125 billion for the 2023-25 biennium.
  • The preliminary total of revenue dedicated to the OPA for the 2019-21 biennium is $337 million, $1 million higher than the June forecast. The forecast was increased by $1 million in the 2021- 23 biennium and decreased by $1 million in the 2023-25 biennium. Forecasted OPA revenue is now $349 million for the 2021-23 biennium and $350 million for the 2023-25 biennium.

The Governor will use the November forecast revenue estimates when constructing his proposed 2022 supplemental operating budget, which will amend the enacted 2021-23 biennial budget.

Stay tuned to the OPBlog for updates as we begin planning for the 2022 legislative session!