Tag: economy

The Economic and Revenue Forecast Council (ERFC) released their November revenue forecast on November 20. The final tabulation of Near General Fund-State (GF-S) revenue for the 2017-19 biennium was $46.081 billion, $5 million less than estimated in September. Projected revenue collections increased by $299 million for the 2019-21 biennium and by $181 million for the 2021-23 biennium. The report projects similar growth to the September revenue forecast.

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

• $51.733 billion for the 2019-21 biennium, 12.3 percent more than the 2017-19 biennium
• $55.154 billion for the 2021-23 biennium, 6.6 percent more than the 2019-21 biennium

More background on the state revenue forecast is available here.

Some context behind the numbers:

Washington state:

• Revenue collections have been higher than forecasted in September. Cumulative major General Fund-State (GF-S) revenue collections from September 11 through November 10, 2019 were $135 million above the forecast. Much of this surplus, however, came from transfers of unclaimed property into the GF-S, which were $47 million higher than forecasted in October.
• Cumulative Revenue Act taxes (retail sales and use, business and occupation, public utility and non-cigarette tobacco products taxes), which make up the bulk of General Fund-State (GF-S) revenue, were $50 million (1.7 percent) higher than forecasted.
• Cumulative real estate excise taxes (REET) came in $22 million (11.8 percent) higher than forecasted. Large commercial sales spiked while residential sales activity remained close to forecasted levels.
• Over half of the increase in forecasted GF-S revenue for the current biennium and the bulk of the increase for the next biennium came from property tax collections. These increases stemmed from a revised estimate of the market value of the existing stock of taxable property, which will determine the level of the calendar year 2020 levy. The increase in estimated market value will increase the levy for next year as well as the following years. The revised valuation, combined with other forecast changes, has resulted in a forecast increase of $147 million for the current biennium and $177 million for the 2021-23 biennium.

Local:

• Seattle area home prices rose over the year for the first time in five months. According to the S&P/Case-Shiller Home Price Indices, seasonally adjusted Seattle area home prices increased 0.5 percent in August while the composite-20 index declined 0.2 percent. Seattle home prices increased 0.5 percent in July as well. Because of the growth in the last two months, Seattle home prices are up 0.7 percent over the year.

• Seattle area consumer price inflation slightly outpaced the national average in October. From October 2018 to October 2019, the Seattle CPI rose 2.2 percent compared to a 1.8 percent increase in the U.S. City Average.

Governor Jay Inslee will use revenue estimates from this forecast when crafting his proposed 2020 supplemental operating budget, which will amend the enacted 2019-21 biennial budget. The Governor’s budget release is the first step in the budget process for the upcoming 2020 legislative session, which begins in January.

Stay tuned to the OPBlog for updates on the 2020 supplemental budget proposals and the legislative session!

The Economic and Revenue Forecast Council (ERFC) released their September revenue forecast. The projected Near General Fund-State (GF-S) revenue forecast for the 2017-19 biennium increased by $27 million. Projected revenue collections for the 2019-21 biennium increased by $447 million, decreased by $63 million for the 2021-23 biennium. The report projects similar growth to the June revenue forecast.

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

• $46.086 billion for the 2017-19 biennium, 18.0 percent more than the 2015-17 biennium
• $51.435 billion for the 2019-21 biennium, 11.6 percent more than the 2017-19 biennium
• $54.973 billion for the 2021-23 biennium, 6.9 percent more than the 2019-21 biennium

Some context behind the numbers:

Washington state:

• The June forecast included an $85 million transfer of property tax from the GF-S into the Education Legacy Trust Account (ELTA) in Fiscal Year (FY) 2019. While some of this transfer did occur in June 2019, $84 million of the transfer occurred in July 2019, the first month of FY20. This increased the preliminary cash estimate of GF-S revenue for the 2017-19 biennium by $84 million above the June forecast and decreased the forecast for the 2019-21 biennium by the same amount.
• The preliminary estimate of GF-S revenue for the 2017-19 biennium, which ended June 30, 2019, is $44.144 billion, which is $102 million higher than forecasted in June. Absent the abovementioned delayed transfer, however, collections would have been $18 million higher than forecasted.
• While the September economic forecast was very similar to the June forecast, expected Revenue Act collections have increased in the current 2019-21 biennium due to their recent strength. Expected slower growth in the 2021-23 biennium, however, has slightly reduced expected Revenue Act collections in that period.
• Washington’s unemployment rate remained at 4.6 percent in August for a fourth consecutive month. The state’s unemployment rate remains near its all-time low of 4.4 percent last reached in October 2018.
• Washington personal income rose to $471.5 billion in the first quarter from $466.6 billion in the fourth quarter of 2018. The reported 4.3 percent growth rate in Washington personal income was the 15th largest among the states and District of Columbia and exceeded the 3.4 percent growth rate for the U.S. as a whole.

Local:

• Seattle area home prices increased in July but were down over the year. According to the S&P/Case-Shiller Home Price Indices, seasonally adjusted Seattle area home prices increased 0.5 percent from June to July. Monthly Seattle home prices have, on average, been trending down since June 2018. As of July 2019, Seattle home prices were down 0.7 percent over the year.
• Seattle area consumer price inflation continued to outpace the national average in August. From August 2018 to August 2019, the Seattle CPI rose 3.2 percent compared to the 1.8 percent increase in the U.S. City Average.

The Governor will use the November forecast revenue estimates when crafting his proposed 2020 supplemental operating budget, which will amend the enacted 2019-21 biennial budget.

Stay tuned to the OPBlog for updates on revenue forecasts and the upcoming 2020 legislative session!

The Economic and Revenue Forecast Council (ERFC) released their June revenue forecast. The projected Near General Fund-State (GF-S) revenue forecast for the 2017-19 biennium decreased by $47 million. Projected revenue collections for the 2019-21 biennium increased by $432 million. This change was primarily driven by legislative activity in the 2019 session. The report projects similar growth to the March revenue forecast.

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

• $46.059 billion for the 2017-19 biennium, 17.9 percent more than the 2015-17 biennium
• $50.988 billion for the 2019-21 biennium, 10.7 percent more than the 2017-19 biennium
• $55.036 billion for the 2021-23 biennium, 7.9 percent more than the 2019-21 biennium

Some context behind the numbers:

• Revenue has been coming in close to the March 2019 forecast. Cumulative major GF-S revenue collections from March 11 through June 10, 2019 were only 0.5 percent ($30 million) higher than expected.
• Washington’s unemployment rate remained at 4.7 percent in May after increasing in March and April. The reason for the increase in recent months is that although employment has continued to grow, the labor force has grown faster.
• Legislative changes accounted for significant adjustments to the previous forecast. This included:
  • An $85 million transfer of property tax into the Education Legacy Trust Account (ELTA), which decreased the forecasted GF-S revenue for the 2017-19 biennium by $87 million. The legislated transfer of additional real estate excise taxes (REET) revenue from new graduated rates plus other small changes added $220 million to forecasted ELTA revenue in the 2019-21 biennium and $327 million in the 2021-23 biennium.
  • An increase in REET receipts due to the adoption of graduated tax rates. The total increase in GF-S revenue from legislative and budget-driven changes is $109 million in the 2019-21 biennium and $282 million in the 2021-23 biennium.
• Absent these legislative changes, forecasted revenue for the 2019-21 and 2021- 23 biennia would have increased slightly due to positive changes in the economic forecast. Most of the increases stemmed from Revenue Act taxes and REET. These economic changes increased forecasted revenue by $86 million in the 2019-21 biennium and $64 million in the 2021-23 biennium.

Stay tuned to the OPBlog for updates on revenue forecasts!

The Washington Economic and Revenue Forecast Council (ERFC) released their March revenue forecast on March 20. The projected Near General Fund-State (NGF-S) revenue forecast for the current 2017-19 biennium increased by $307 million, while the projected revenue collections for the upcoming 2019-21 biennium increased by $553.5 million. The report shows a similar forecast as that published in November.

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

• $46.106 billion for the 2017-19 biennium, 18.1 percent more than the 2015-17 biennium
• $50.555 billion for the 2019-21 biennium, 9.6 percent more than the 2017-19 biennium
• $54.358 billion for the 2021-23 biennium, 7.5 percent more than the 2019-21 biennium

A bit more context about these numbers:

• Cumulative major GF-S revenue collections were 3.7 percent higher than forecasted in November. Nearly one third of this extra revenue can be attributed to non-economic factors including one-time large payments and early payment of taxes. Accounting for these factors, collections were about 2.6 percent higher than forecasted in November, and are primarily due to stronger-than-expected taxable activity.
• Washington’s February unemployment rate has maintained consistent at 4.5 percent, unchanged from recent months but higher than in the November forecast.
• Personal income decreased slightly compared to the November forecast. Despite this, WA personal income growth has outpaced the county in 26 of the last 35 quarters.
• Cumulative real estate excise taxes (REET) accounted for 11.2 percent of GF-S collections. Revenue associated with the sales of large commercial properties was significantly above forecasted levels.
• Major threats to the U.S. and Washington economies remain, including international trade concerns, geopolitical risks, and a maturing economic expansion.

The forecast points out that lawmakers have already taken steps to increase revenue in the current legislative session. Substitute Senate Bill 5581, which Governor Inslee signed on March 14, will facilitate the collection of state taxes on online sales by out-of-state vendors and is estimated to increase GF-S revenue by $115 million in the 2019-2021 biennium and $190 million in the 2021-23 biennium.

Budget writers in the Senate and House will use this updated forecast of projected 2019-21 revenues as a baseline for their budget proposals. We look forward to reviewing these proposals as soon as next week! Stay tuned to the OPBlog for updates on the legislative session and state budget proposals.

Today, the Washington state Economic and Revenue Forecast Council (ERFC) released their February revenue forecast. The projected General Fund-State (GF-S) revenue forecast for the 2017-19 biennium increased by $647 million. Projected revenue collections for the 2019-21 biennium have also increased by $671 million. According to the Governor’s Office of Financial Management (OFM), this forecast is the “largest quarterly increase for the state since before the Great Recession.”

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

• $44.213 billion for the 2017-19 biennium, 15.4% more than that of the 2015-17 biennium.
• $48.253 billion for the 2019-21 biennium, 9.1% more than expected 2017-19 biennial.
• The initial forecast for the 2021-23 biennium is $51.932 billion, an increase of 7.6% over that of the 2019-21 biennium

Behind the numbers:

• Cumulative major General Fund-State (GF-S) revenue collections from November 11, 2017 through February 10, 2018 were $185 million (3.5%) higher than forecasted in November.
• The Washington economy saw strong housing construction and home price appreciation. Cumulative real estate excise taxes (REET) came in $44 million (21.1%) higher than forecasted. Projected property tax receipts are also 3% higher than expected.
• For the first time in nearly three years, Washington exports increased (0.6%) in the fourth quarter of 2017.
• The forecast anticipates continued but slowing growth in employment (2.2%) and personal income (4.6%). Disposable personal income is also higher than assumed (5.0%) than November because of federal tax cuts.

We expect that the majority leadership in the House and Senate will release budget proposals early next week. Stay tuned to the OPBlog for updates!

Today, the Washington state Economic and Revenue Forecast Council (ERFC) released November revenue forecast. The forecast increased projected General Fund-State (GF-S) revenue for the 2017-19 biennium by $304 million. Projected revenue collections for the 2019-21 biennium have also increased by $186 million. These new projections show a slight increase from the September revenue forecast.

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

• Final GF-S revenue collections for the 2015-17 biennium, which ended June 30, 2017, were $38.317 billion, an increase of 13.8 percent over the 2013-15 biennium ($6 million higher than what was estimated in September 2017).
• $43.566 billion for the 2017-19 biennium, 13.7 percent more than the 2015-17 biennium.
• $47.582 billion for the 2019-21 biennium, 9.2 percent more than the 2017-19 biennium.

Behind the numbers:

• Cumulative major GF-S revenue collections from September 11, 2017 through November 10, 2017 were $119 million (3.9%) higher than forecasted in September.
• Forecasted personal income in Washington is slightly higher than September.
• The forecast attributes most changes in revenue to property taxes. Under legislation passed in the 2017 special sessions, property taxes for the next four years will increase by a new formula that will lead to more revenue collection.
• Similar to the September forecast, concerns cited in this forecast include slow U.S. economic growth, weak labor productivity growth, and international trade concerns.

This is the last revenue forecast of the year. Governor Jay Inslee will use the November revenue forecast to craft his 2018 supplemental budget proposal (amending the 2017-19 biennial budget), which is expected to be released in December. Stay tuned to the OPBlog for updates on the Governor’s budget proposal when it is released.