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March State Revenue Forecast Steady for Current Biennium, Revised Downward for the 2025-27 and 2027-29 Biennia

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The Washington State Economic and Revenue Forecast Council (ERFC) released its March 2025 revenue forecast on Tuesday, March 18. Revenue projections were steady for the current 2023-25 biennium but down for the upcoming 2025-27 and 2027-29 biennia.

Overall, the forecast projects that state revenue will increase by $54 million for the current 2023-25 biennium but decrease by $479 million for the 2025-27 biennium and $420 million for the 2027-29 biennium compared to the September forecast.

In November, we highlighted that the ERFC expected revenue to decline slightly compared to previous projections for the current and upcoming biennia. This was driven by declines in the State’s sales and business and occupation (B&O) taxes as well as declines in lottery revenue. These declines were partially offset by gains in other areas. The March 2025 forecast continues to identify decreasing sales and B&O tax revenue as a significant concern, as well as decreased interest revenue from state reserves.

On the positive side, the March 2025 forecast notes that inflation is slowing. The Seattle-area consumer price inflation (CPI) rose less than the national average, with the seasonally adjusted CPI rising 2.5% compared to the 2.8% increase in the U.S. City Average index. However, uncertainty regarding tariffs, federal workforce reductions and budget cuts, high interest rates, and the ongoing conflicts in Ukraine and the Middle East all pose risks to the economy. Given these factors, ERFC believes the Federal Reserve will act cautiously, with only a single interest rate cut expected in 2025.

General Fund-State Revenue

Below is the total preliminary and projected General Fund-State (GF-S) revenue for each biennium:

  • $66.45 billion for the 2023-25 biennium, 0.1% above the previous forecast.
  • $70.95 billion for the 2025-27 biennium, 0.7% below the previous forecast.
  • $76.43 billion for the 2027-29 biennium, 0.5% below the previous forecast.

Below is the total preliminary and projected GF-S revenue for accounts from which the University receives dedicated funding:

  • Forecasted revenue dedicated to the Workforce Education Investment Account (WEIA) has increased by $32.9 million for the 2023-25 biennium but decreased slightly by $2.1 million for the 2025-27 biennium and $4.5 million for the 2027-29 biennium. Forecasted WEIA revenue is now $914.6 million for the 2023-25 biennium, $942.6 million for the 2025-27 biennium, and $1.01 billion for the 2027-29 biennium.
  • The forecast for Education Legacy Trust Account (ELTA) revenue has increased by $29.9 million in the 2023-25 biennium, $181.3 million in the 2025-27 biennium, and $166.7 million in the 2027-29 biennium. Forecasted ELTA revenue is now $2.12 billion for the 2023-25 biennium, $2.48 billion for the 2025-27 biennium, and $2.71 billion for the 2027-29 biennium.

2025-27 State Operating Budget

The March revenue forecast will inform the 2025-27 biennial operating, capital, and transportation budgets. Proposed budgets are expected to be released by House and Senate leadership the week of March 24.

The revenue projections further strain Washington’s operating budget, which faces a projected deficit of over $12 billion. This deficit is the result of several factors, including increasing demand for state services, rising costs and inflation, and decreasing revenue, as well as newly negotiated collective bargaining agreements for state workers. The Legislature will likely rely on a mix of budget cuts, revenue increases, and reserve drawdowns to balance the budget.

Stay tuned for updates on budget proposals, as well as the final compromise budgets, which are expected to be adopted before the end of the legislative session on April 27.

More background on the state revenue forecasts can be accessed on our website.

November Revenue Forecast Down Slightly for Current and 2025-27 Biennia, Further Straining State Budget

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The Washington State Economic and Revenue Forecast Council (ERFC) released its November revenue forecast on Wednesday, November 20, 2024. Revenue projections were down slightly for the current 2023-25 biennium as well as for the upcoming 2025-27 biennium.

In September, we highlighted that experts expected revenue to remain steady relative to previous projections for the current and upcoming biennia. Declines in expected revenue from the State’s sales tax were largely offset by positive revenue growth from the estate tax and real estate excise tax (REET).

The November 2024 forecast notes that inflation is slowing but that Seattle-area consumer price inflation (CPI) continues to exceed the national average, with the seasonally adjusted CPI rising 3.0% compared to the 2.6% increase in the U.S. City Average index. With inflation slowing, the Federal Reserve recently reduced interest rates by a quarter percentage point. Another rate cut is expected during the Federal Reserve’s December meeting, with the potential for additional rate cuts next year. However, current high interest rates, the ongoing conflicts in Ukraine and the Middle East, and the potential for tariffs imposed by the incoming Trump administration all pose risks to the economy.

Given these factors, the forecast projects that state revenue will decrease by $89 million for the current 2023-25 biennium and decrease by $181 million for the 2025-27 biennium compared to the September forecast.

These revisions are due to declines in expected revenue from the State’s sales and business and occupation (B&O) tax as well as from the State’s lottery. These declines are partially offset by positive revenue growth in other areas.

the revenue revisions for November are relatively modest, the projections further strain Washington’s $72 billion biennial budget. Currently, the Governor’s Office of Financial Management is projecting between a $10 and $12 billion budget deficit over the next four years. This projected deficit is the result of several factors including increasing demand for state services, rising costs and inflation, and decreasing revenue, as well as newly negotiated collective bargaining agreements for state workers. The Legislature could rely on a mix of budget cuts and revenue increases to balance the budget when it meets early next year. As such, OFM recently asked state agencies to prepare initial plans for budget reductions.

More background on the state revenue forecasts can be accessed on our website.

Near General Fund-State

Below is a summary of the total preliminary and projected Near General Fund-State (GF-S) revenue for each biennium.

  • $66.39 billion for the 2023-25 biennium, 0.1% below the previous forecast. However, total revenue for this biennium is still forecasted to grow over the previous 2021-23 biennium.
  • $71.43 billion for the 2025-27 biennium, 0.3% above the previous forecast.

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

  • Forecasted revenue dedicated to the Workforce Education Investment Account (WEIA) has decreased by $4.0 million for the 2023-25 biennia and by $7.6 million for the 2025-27 biennia. Forecasted WEIA revenue is now $881.8 million for the 2023-25 biennium and $944.7 million for the 2025-27 biennium.
  • The forecast for Education Legacy Trust Account (ELTA) revenue has increased by $48.5 million in the 2023-25 biennium but decreased by $54.2 million in the 2025-27 biennium. Forecasted ELTA revenue is now $2.09 billion for the 2023-25 biennium, and $2.3 billion for the 2025-27 biennium.

The November revenue forecast will inform Governor Inslee’s 2025-27 biennial budget proposals, which will be released in December. This is Governor Inslee’s final proposal, as Governor-elect Bob Ferguson will be taking office in January. Stay tuned for updates on those requests, as well as the upcoming legislative session, which begins January 13, 2025.

September Revenue Forecast Flat for Current and 2025-27 Biennia 

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The Washington State Economic and Revenue Forecast Council (ERFC) released its September revenue forecast on Friday, September 27, 2024. Revenue projections were relatively flat for the 2023-25 biennium as well as for the upcoming 2025-27 biennium.  

In June, we highlighted that experts expected revenue to fall from previous projections for the 2023-25 and 2025-27 biennia. This reduction was driven by declines in revenue collections from the State’s capital gains tax and sales tax.  

The September 2024 forecast notes that inflation is slowing but that Seattle-area consumer price inflation (CPI) continues to exceed the national average, with the seasonally adjusted CPI rising 3.1% compared to the 2.5% increase in the U.S. City Average index. With inflation slowing, the Federal Reserve recently reduced interest rates by half a percentage point. Additional rate cuts are expected later this year. However, current high interest rates, the ongoing conflicts in Ukraine and the Middle East, and the Boeing machinist and dockworkers strikes all pose risks to the economy. 

Given these factors, the forecast projects that state revenue is expected to decrease by $49.2 million for the current 2023-25 biennium while increasing $79.1 million for the 2025-27 biennium compared to the June forecast. 

These small revisions are due to declines in expected revenue from the State’s sales tax. These declines are partially offset by positive revenue growth from the estate tax and real estate excise tax (REET) 

More background on the state revenue forecasts can be accessed on our website. 

Near General Fund-State 

Below is a summary of the total preliminary and projected Near General Fund-State (GF-S) revenue for each biennium.  

  • $66.48 billion for the 2023-25 biennium, 0.1% below the previous forecast. However, total revenue for this biennium is still forecasted to grow over the previous 2021-23 biennium.  
  • $71.61 billion for the 2025-27 biennium, 0.1% above the previous forecast.  

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

  • Forecasted revenue dedicated to the Workforce Education Investment Account (WEIA) has increased by $6.0 million for the 2023-25 biennia and increased by $8.5 million for the 2025-27 biennia. Forecasted WEIA revenue is now $885.8 million for the 2023-25 biennium and $952.3 million for the 2025-27 biennium.  
  • The forecast of Education Legacy Trust Account (ELTA) revenue has increased by $54.1 million in the 2023-25 biennium and increased by $96.9 million in the 2025-27 biennium. Forecasted ELTA revenue is now $2.04 billion for the 2023-25 biennium and $2.36 billion for the 2025-27 biennium.  

The next revenue forecast will be released in November and will inform the development of Governor Inslee’s 2025-27 biennial budget requests to the Legislature, the final of his term in office. Stay tuned to for updates on our 2025-27 state budget requests and the next state legislative session beginning in January 2025. 

June Revenue Forecast Revised Downward for Current and 2025-27 Biennia

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The Washington State Economic and Revenue Forecast Council (ERFC) released its June revenue forecast on Wednesday, June 26, 2024. Revenue projections were revised downward for the current 2023-25 biennium as well as for the 2025-27 biennium.  

In February, we highlighted that experts expected revenue to increase over previous projections for the 2023-25 and 2025-27 biennia. This growth was driven by the continued strength of the job market, both nationally and at the state level. 

The June 2024 forecast notes that the Seattle-area consumer price inflation continued to exceed the national average, with the seasonally adjusted CPI rising 4.4% compared to the 3.4% increase in the U.S. City Average index. While inflation continues to slow, it is now expected that the Federal Reserve will start reducing interest rates in the fourth quarter of 2024, later than previously anticipated. Additionally, slowing consumer demand driven by current high interest rates, high oil prices, a reduction in expected housing permits, slowing personal income and employment growth, and the ongoing conflicts in Ukraine and the Middle East pose risks to the economy.   

Given these continued challenges, the forecast projects that state revenue is expected to decrease by $477 million in the 2023-25 biennium and decrease by $189 million for the 2025-27 biennium compared to the February forecast.  

The majority of this change is due to declines in expected revenue from the state’s capital gains tax and sales tax. These declines are partially offset by positive revenue growth from the estate tax and real estate excise tax (REET) 

More background on the state revenue forecasts can be accessed on our website. 

Near General Fund-State 

Below is a summary of the total preliminary and projected Near General Fund-State (GF-S) revenue for each biennium.  

  • $65.53 billion for the 2023-25 biennium, 0.7% below the previous forecast. However, total revenue for this biennium is still forecasted to grow over the previous 2021-23 biennium.  
  • $71.53 billion for the 2025-27 biennium, 0.3% below the previous forecast.  

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

  • Forecasted revenue dedicated to the Workforce Education Investment Account (WEIA) has increased by $24.1 million for the 2023-25 biennia and increased by $33.9 million for the 2025-27 biennia. Forecasted WEIA revenue is now $879.8 million for the 2023-25 biennium and $943.8 million for the 2025-27 biennium.  
  • The forecast of Education Legacy Trust Account (ELTA) revenue decreased by $188.1 million in the 2023-25 biennium and decreased by $118.9 million in the 2025-27 biennium. Forecasted ELTA revenue is now $1.99 billion for the 2023-25 biennium and $2.26 billion for the 2025-27 biennium.  

This latest revenue forecast will be considered as the University of Washington prepares to submit its 2025-27 biennial budget requests to the Legislature this September. These requests will build upon investments made in the 2024 supplemental budget, prioritizing needs across our three campuses. 

The next state revenue forecast will be released in September. Stay tuned for updates on our 2025-27 state budget requests and the next state legislative session beginning in January 2025. 

February Revenue Forecast Again Revised Upward for Current Biennium

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The Washington State Economic and Revenue Forecast Council (ERFC) released its February revenue forecast on Wednesday, February 14, 2024. Revenue projections were again revised upward for the current 2023-25 biennium as well as for the 2025-27 biennium.

In November, we highlighted that experts expected revenue to increase over recent projections for the 2023-25 and 2025-27 biennia. This growth was driven by the continued strength of the job market.

The February 2024 forecast notes that the Seattle-area consumer price inflation continued to exceed the national average, with the seasonally adjusted CPI rising 4.4% compared to the 3.4% increase in the U.S. City Average index. However, inflation continues to slow, and it is expected that the Federal Reserve will start reducing interest rates in the second quarter of 2024. Meanwhile, slowing consumer demand driven by high interest rates and the ongoing conflicts in Ukraine and the Middle East continue to pose risks to the economy.

Despite these challenges, the forecast projects that state revenue growth is expected to increase by $122 million in the 2023-25 biennium and increase by $215 million for the 2025-27 biennium compared to the November forecast.

As noted, these numbers represent an improvement over the previous forecast. While revenue growth remains slow, the projected increases are driven by the continued strength of the job market, both nationally and at the state level. Washington’s unemployment rate for December was at 4.2%, a slight increase from previous months.

More background on the state revenue forecasts can be accessed on our website.

Near General Fund-State

Below is a summary of the total preliminary and projected Near General Fund-State (GF-S) revenue for each biennium.

  • $67 billion for the 2023-25 biennium, 0.2% over the expected 2023-25 biennium.
  • $71.72 billion for the 2025-27 biennium, 0.3% over the expected 2025-27 biennium.

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

  • Forecasted revenue dedicated to the Workforce Education Investment Account (WEIA) has increased by $13 million for the 2023-25 biennia and increased by $31 million for the 2025-27 biennia. Forecasted WEIA revenue is now $856 million for the 2023-25 biennium and $910 million for the 2025-27 biennium.
  • The forecast of Education Legacy Trust Account (ELTA) revenue was increased by $31.5 million in the 2023-25 biennium and increased by $6 million in the 2025-27 biennium. Forecasted ELTA revenue is now $2.17 billion for the 2023-25 biennium and $2.38 billion for the 2025-27 biennium.

The Washington State House of Representatives and Senate will release their proposed 2024 supplemental budgets later this month. A final compromise supplemental budget is expected to be adopted in early March before the end of the legislative session. Stay tuned to the OPBlog for updates on these proposals.

 

 

 

 

Announcing a new organization: Finance, Planning & Budgeting

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Effective January 16, 2024, UW Finance and the Office of Planning & Budgeting have united as one team. Sarah Norris Hall will serve as Senior Vice President of Finance, Planning & Budgeting (FPB). This organizational chart reflects the new organization with leadership updates and high-level reporting structures.

FPB Org Chart March 2024
FPB Org Chart March 2024

Message from Sarah Hall: 

I am truly honored to have been asked by President Cauce and Provost Serio to lead our new Finance, Planning and Budgeting team. I am excited for us to pool our expertise, efforts and creativity as a new organization and build on our work in service to a great public university that is deeply committed to its student access, excellent teaching, public service, discovery, and health missions.  

I want to extend my gratitude and congratulations to Brian McCartan, who has not only been a thoughtful and strategic partner in our shared work, but also supportive and gracious as we prepare for this transition. I wish Brian all the best in his retirement.  

Together we now have the opportunity, and the mandate, to urgently address the challenges we continue to encounter with Workday Finance, and to provide a level of strategy, analysis and decision support to our President, Provost, and Board that we were previously unable to provide. The imperative to stabilize our implementation of this software is both an opportunity and a responsibility that we all take seriously. I know we have a lot of work to do and I’m confident we can make further progress together.  

By uniting our teams, we can create more efficient and mutually supportive relationships and leverage expertise which may have been duplicative or not fully utilized in the past.  This will allow us to focus on our shared work and provide excellent analysis, reporting, planning, controls, and support to the broader UW.  

Moving ahead, I look forward to aligning our shared goals, growing together, supporting each other through this initial transition, and creating an organizational alignment that serves the University and our community. There’s a lot at stake, and we will need everyone’s help. 

Between now and June 2024, we will undergo an assessment and consultation to further integrate our teams. We will do this in an organized way, taking into account how we might pool our resources and expertise to align further in support of each other, and our work on behalf of the UW. We will use a mix of qualitative and quantitative measures to land an integration plan by June 2024. I will work closely with those in leadership positions to co-create an integration plan that sets us up for success long-term. 

I look forward to listening, learning, and collaborating to evolve our Finance, Planning and Budgeting Team with a shared vision to serve and support the instructional, research, service, and patient health missions of the University. Thank you in advance for your patience, your hard work, your deep commitment, and your collegial partnership.   

Sincerely, and gratefully, 

Sarah 

UW finance, planning and budgeting merge to better serve faculty, staff and students

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From 1/12/24 UW News

President Ana Mari Cauce and Provost Tricia Serio announced an organizational and leadership restructuring in the areas of finance, planning and budgeting aimed at improving the effectiveness and efficiency of these areas’ service to the University community. The changes, which take effect Tuesday, Jan. 16, come after an external review determined a unified organization will better serve faculty and academic personnel, as well as staff and students.

The newly configured Office of Finance, Planning and Budgeting combines UW Finance with the UW Office of Planning and Budgeting. The UW’s payroll department will also move out of Information Technology and into Finance, Planning and Budgeting.

Photo collage of Jessica Bertram, Sarah Norris Hall and Jason Campbell
Photo collage of Jessica Bertram, Sarah Norris Hall and Jason Campbell

This new organization will be led by Sarah Norris Hall, who was named senior vice president and chief financial officer. Reporting to Hall will be Jason Campbell, the UW’s new vice president for Finance & Budget Strategy and deputy chief financial officer and Jessica Bertram, who will be vice president for University Business Services. Previously, finance and business services fell under Vice President Brian McCartan, who is retiring. Also reporting to Hall will be Erin Guthrie, associate vice provost for Institutional Analysis and University Data Officer, and Jed Bradley, executive director for Planning, Policy and State Operations; both functions were part of Planning & Budgeting.

Read the rest of the news release on UW News.

November Revenue Forecast Revised Upward for Current Biennium

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The Washington State Economic and Revenue Forecast Council (ERFC) released its November revenue forecast on Monday, November 20, 2023. Revenue projections were again revised upward for the current 2023-25 biennium as well as for the 2025-27 biennium.

In September, we highlighted that experts expected revenue to increase over recent projections for the 2023-25 and 2025-27 biennia, returning to levels that had been anticipated in the November 2022 forecast. This growth was driven by the continued strength of the job market.

The November 2023 forecast notes that the Seattle-area consumer price inflation continued to exceed the national average, with the seasonally adjusted CPI rising 4.8% compared to the 3.2% increase in the U.S. City Average index. Given the continued relatively high rate of inflation, the forecast assumes the Federal Reserve will raise interest rates to a range of 5.5% – 5.75% in December, before slowly starting to reduce rates sometime in 2024. Additionally, instability in the commercial real estate sectors, slowing consumer demand, and the ongoing conflicts in Ukraine and the Middle East continue to pose risks to the economy.

Despite these challenges, the forecast projects that state revenue growth is expected to increase by $191 million in the 2023-25 biennium and increase by $579 million for the 2025-27 biennium compared to the September forecast.

As noted, these numbers represent an improvement over the previous forecast. While growth remains slow, the projected increases are driven by the continued strength of the job market, both nationally and at the state level. Washington’s unemployment rate for October was at 3.8%, a slight increase from the all-time Washington state low of 3.6% seen in September.

More background on the state revenue forecasts can be accessed on our website.

Near General Fund-State

Below is a summary of the total preliminary and projected Near General Fund-State (GF-S) revenue for each biennium.

  • $66.88 billion for the 2023-25 biennium, 3.3% over the expected 2021-23 biennium.
  • $71.51 billion for the 2025-27 biennium, 6.9% over the expected 2023-25 biennium.

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

  • Forecasted revenue dedicated to the Workforce Education Investment Account (WEIA) has increased by $5 million for both the 2023-25 and 2025-27 biennia. Forecasted WEIA revenue is now $843 million for the 2023-25 biennium and $879 million for the 2025-27 biennium.
  • The forecast of Education Legacy Trust Account (ELTA) revenue was increased by $6 million in the 2023-25 biennium and $59 million in the 2025-27 biennium. Forecasted ELTA revenue is now $2.14 billion for the 2023-25 biennium and $2.37 billion for the 2025-27 biennium.

Governor Inslee will use this forecast as the basis for his proposed 2024 supplemental budgets, which are expected to be released in December. Stay tuned to the OPBlog for updates on these proposals, as well as the 2024 legislative session, which begins on January 8.

 

September Revenue Forecast Revised Upward for Current Biennium, Returning to Previously Projected Levels Despite Slowing Growth

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The Washington State Economic and Revenue Forecast Council (ERFC) released its September revenue forecast on Tuesday, September 26, 2023. Revenue projections were again revised upward for the 2023-25 and 2025-27 biennia, as well as for the 2021-23 biennium that ended on June 30.

In June, we highlighted that experts expected revenue to increase slightly over the March projection for the 2023-25 and 2025-27 biennia, though the forecast was still lower than what had been predicted last November. This change upward was driven by stronger than expected capital gains tax collections, slightly higher construction activity and sales and use tax collections, and the continued strength of the job market.

The September forecast notes that the Seattle-area consumer price inflation continued to exceed the national average, with the seasonally adjusted CPI rising 5.4% compared to the 3.7% increase in the U.S. City Average index. Given the continued high rate of inflation, the forecast assumes the Federal Reserve will raise interest rates to a range of 5.5% – 5.75% in November, before starting to reduce rates sometime in 2024. Additionally, the potential for a federal government shutdown, instability in the banking and commercial real estate sectors, the resumption of student loan repayments, and the ongoing conflict in Ukraine continue to pose risks to the economy.

Despite these challenges, the forecast projects that state revenue growth is expected to increase by $663 million in the 2023-25 biennium and increase by $437 million for the 2025-27 biennium compared to the June forecast. Additionally, revenue for the just concluded 2021-23 biennium increased by $265 million.

As noted, these numbers represent an improvement over the previous forecast. While growth is slowing, the projected increases are driven by the continued strength of the job market, both nationally and at the state level. Washington’s unemployment rate for August remained at 3.6%, an all-time low.

More background on the state revenue forecasts can be accessed on our website.

Near General Fund-State

Below is a summary of the total preliminary and projected Near General Fund-State (GF-S) revenue for each biennium. These numbers are now similar to those projected last November before the decline forecasted in March.

  • $64.75 billion for the 2021-23 biennium, 21.9% over the 2019-21 biennium.
  • $66.69 billion for the 2023-25 biennium, 3.0% over the expected 2021-23 biennium.
  • $70.93 billion for the 2025-27 biennium, 6.3% over the expected 2023-25 biennium.

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

  • Forecasted revenue dedicated to the Workforce Education Investment Account (WEIA) has increased by $13 million in the 2021-23 biennium, $28 million in the 2023-25 biennium, and $31 million in the 2025-27 biennium. Forecasted WEIA revenue is now $779 million for the 2021-23 biennium, $838 million for the 2023-25 biennium, and $874 million for the 2025-27 biennium.
  • The forecast of Education Legacy Trust Account (ELTA) revenue was increased by $141 million in the 2021-23 biennium. Forecasted ELTA revenue is now over $2.57 billion for the 2021-23 biennium, $2.14 billion for the 2023-25 biennium, and $2.31 billion for the 2025-27 biennium.

The next state revenue forecast will be released in November, which the Governor will use as a basis for his proposed 2024 supplemental budgets. Stay tuned to the OPBlog for updates as we prepare for the 2024 legislative session.

June Revenue Forecast Projections Revised Slightly Upward for Upcoming Biennium, Despite Slowing Growth

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The Washington State Economic and Revenue Forecast Council (ERFC) released its June revenue forecast on Tuesday, June 27, 2023. Revenue projections have been revised slightly upward for the current biennium as well as for the 2023-25 and 2025-27 biennia.

In March, we highlighted that experts expected revenue to decrease over previous projections for the 2023-25 and 2025-27 biennia. This prediction was based on continued high inflation and interest rates, recent bank failures and tech sector layoffs, uncertainty about the federal debt ceiling, and the war in Ukraine.

The June forecast notes that the Seattle-area consumer price inflation continued to exceed the national average, with the seasonally adjusted CPI rising 7.0% compared to the 5.0% increase in the U.S. City Average index. Given the continued high rate of inflation, the forecast assumes the Federal Reserve will raise interest rates to a range of 5.25% – 5.5% by July 2023. However, there is some uncertainty regarding this assumption, as the Federal Reserve chose not to raise interest rates at its June meeting. Additionally, technology sector layoffs, concerns about bank instability, and the Ukraine-Russia conflict continue to pose risks to the economy.

Despite these challenges, the forecast projects that state revenue growth will increase by $341 million in the 2021-23 biennium over the March forecast. Revenue is then expected to increase by $327 million in the 2023-25 biennium and increase by $147 million for the 2025-27 biennium. While these numbers represent an improvement over the previous forecast, they are still lower than what had been predicted last November.

The changes from the March forecast are driven by stronger than expected capital gains tax collections. Construction activity and sales and use tax collections were also slightly stronger than anticipated. In addition, other positive economic trends included the growing job market as well as Washington car and truck sales, which reached a two-year high in May.

More background on the state revenue forecasts can be accessed on our website.

Near General Fund-State

Below is a summary of the total preliminary and projected Near General Fund-State (GF-S) revenue for each biennium.

  • $64.49 billion for the 2021-23 biennium, 21.4% over the 2019-21 biennium.
  • $66.03 billion for the 2023-25 biennium, 2.4% over the expected 2021-23 biennium.
  • $70.49 billion for the 2025-27 biennium, 6.8% over the expected 2023-25 biennium.

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

  • Forecasted revenue dedicated to the Workforce Education Investment Account (WEIA) has increased by $17 million in the 2021-23 biennium, $25 million in the 2023-25 biennium, and $11 million in the 2025-27 biennium. Forecasted WEIA revenue is now $766 million for the 2021-23 biennium, $809 million for the 2023-25 biennium, and $844 million for the 2025-27 biennium.
  • The forecast of Education Legacy Trust Account (ELTA) revenue was increased by $311 million in the 2021-23 biennium. Forecasted ELTA revenue is now over $2.43 billion for the 2021-23 biennium, $2.12 billion for the 2023-25 biennium, and $2.31 billion for the 2025-27 biennium.

The next state revenue forecast will be released in September. Stay tuned to the OPBlog for updates as we close out the 2021-23 biennium and begin planning for the 2024 legislative session.