Planning & Budgeting

December 1, 2021

November Revenue Forecast Shows “Stronger than Expected” Revenue Collections Despite Continued Challenges

Overview

The Economic and Revenue Forecast Council (ERFC) released its November revenue forecast on November 19. We noted in our previous blog post that the September revenue forecast showed continued economic growth in the face of rising COVID-19 cases and hospitalizations. In Washington state, the COVID-19 case rate is down from the recent peak in September; however, there is a continued risk of emerging variants and another winter surge. The COVID-19 pandemic remains an ever-present risk for Washingtonians’ health and safety and continues to pose challenges for the state’s economic recovery and growth. Additionally, there are growing concerns over continued disruptions to supply chains and extraordinary inflation increases. Seattle-area consumer price inflation (CPI) outpaced the national average. From October 2020 to October 2021, the seasonally adjusted Seattle CPI rose 6.5 percent compared to the 6.2 percent increase in the U.S. City Average index. Despite these uncertainties, the November revenue forecast showed that the state taxable activity was much stronger than expected, and the Council increased revenue totals in the current biennium (2021-23) by $1.06 billion ahead of the 2022 state legislative session.

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

General Fund State

Per the November revenue forecast, the final total of General Fund-State (GF-S) revenue for the 2019-21 biennium was $50.803 billion, unchanged from the September estimate. The GF-S has been increased by $1.06 billion in the 2021-23 biennium and $944 million in the 2023-25 biennium. Forecasted GF-S revenue is now $57.519 billion for the 2021-23 biennium and $60.864 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, unchanged from the September estimate given that the biennium is now closed. Forecasted revenue has increased by $898 million in the 2021-23 biennium and $965 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.
  • $60.238 billion for the 2021-23 biennium, 13.4 percent over the 2019-21 biennium.
  • $64.047 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 final total of revenue dedicated to WEIA in the 2019-21 biennium was unchanged at $352 million. Forecasted revenue has been increased by $10 million in the 2021-23 biennium and $11 million in the 2023-25 biennium. Forecasted WEIA revenue is now $678 million for the 2021-23 biennium and $748 million for the 2023-25 biennium.
  • The final total of ELTA revenue for the 2019-21 biennium was unchanged at $1.639 billion. The forecast was decreased by $179 million in the 2021-23 biennium and $44 million in the 2023-25 biennium, due to decreases in forecasted capital gains taxes. Forecasted ELTA revenue is now $1.687 billion for the 2021-23 biennium and $2.082 billion for the 2023-25 biennium.

The Governor will use these November forecast revenue estimates when crafting his proposed 2022 supplemental operating budget, which will be released in December. The supplemental operating budget will amend the enacted 2021-23 biennial budget approved during the 2021 legislative session. The Governor’s budget release is the first step in the budget process for the upcoming 2022 legislative session, which begins on January 10 and lasts 60 days.

Stay tuned to the OPBlog for updates on the upcoming 2022 legislative session!