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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.

 

 

 

 

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.

Economic and Revenue Forecast Council Releases April Budget Outlook

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On Thursday, April 30, the Economic and Revenue Forecast Council met to review and approve the April 2020 budget outlook. The budget outlook used the February revenue forecast and contained no major changes to revenues or appropriations for the 2019-21 biennium. During their meeting, the Council acknowledged that there will likely be changes to the revenue forecast in June, but declined to speculate on the size of the impact.

In preparation for Thursday’s meeting, Council Chair Rep. Ed Orcutt requested that staff prepare an unofficial revenue forecast. The Seattle Times reported that, “preliminary numbers show Washington could lose $7 billion in state revenue through 2023 as the coronavirus pandemic takes its toll.” The unofficial forecast is “based on assumptions and come with ‘substantial uncertainty’ given state tax data isn’t yet available for March and April.”

The state’s rainy day fund is approximately $2.5 billion. It is likely that the legislature will convene after the official revenue forecast in June to adjust appropriations in the current biennium.

More background on the state revenue forecast is available here. OPB will provide updates on this blog in the event of a special legislative session, so stay tuned.

February Revenue Forecast Shows Continued Growth

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The Economic and Revenue Forecast Council (ERFC) released their February revenue forecast on February 19. The projected Near General Fund-State (GF-S) revenue forecast increased by $606 million for the 2019-21 biennium and by $536 million for the 2021-23 biennium. The report projects higher than forecasted revenue compared to the November revenue forecast.

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

  • $52.339 billion for the 2019-21 biennium, 13.6 percent more than the 2017-19 biennium
  • $55.690 billion for the 2021-23 biennium, 6.4 percent more than the 2019-21 biennium
  • $59.176 billion for the 2023-25 biennium, 6.3 percent over expected 2021-23 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 November. Cumulative major GF-S revenue collections from November 11, 2019 through February 10, 2020 were $162 million above the forecast. About $90 million of the collections surplus came from a larger-than-expected spike in real estate activity ahead of the January 1 increase in real estate excise tax (REET) rates on property worth more than $1.56 million.
  • 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 GF-S revenue, were $64 million (1.4 percent) higher than forecasted.
  • Forecasted Education Legacy Trust Account (ELTA) revenue for the 2019-21 biennium increased by $310 million, mainly due to higher-than-forecasted estate tax receipts.

Local:

  • Seattle-area home prices rose over the year for a fourth consecutive month in November following year-over-year declines in the previous four months. According to the S&P/Case-Shiller Home Price Indices, seasonally adjusted Seattle home prices increased 0.8 percent in November. Because of the strong growth in the last five months, November Seattle home prices were up 3.3 percent over the year. In comparison, the composite-20 index was up 2.5 percent over the year.
  • Seattle-area consumer price inflation slightly trailed the national average in December despite above average shelter cost inflation. From December 2018 to December 2019, the Seattle CPI rose 2.2 percent compared to a 2.3 percent increase in the U.S. City Average.

The legislature will use revenue estimates from this forecast when crafting the proposed 2020 supplemental operating budget, which will amend the enacted 2019-21 biennial budget. These proposals follow previous proposals from Governor Jay Inslee. A subsequent compromise budget will be released in the coming weeks.

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

November Revenue Forecast Shows Increased Revenue, but Slowing Growth

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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!