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March Revenue Forecast Shows Consistent Growth

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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.

OPB Brief on Published Price vs. Net Price – 2019 update

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The 2019 update of the Published Price vs. Net Price brief is now available on our briefs page, and reflects the newest available data.  The brief includes sector-wide data on trends in published price and net price for public and private four-year colleges and institutions, a description of how declining state investment in higher education has spurred tuition increases, and a table comparing the UW’s net price for resident undergraduates receiving grant or scholarship aid to its U.S. News & World Report top 25 research university peers.

Governor Inslee’s Proposed 2019-21 Biennial Operating and Capital Budgets

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On Thursday, Governor Jay Inslee released his proposed 2019-21 biennial operating and capital budgets. For a detailed analysis and summary of the Governor’s proposals, please see OPB’s brief on this page.

The Governor’s operating budget assumes significant new revenue from the creation of a capital gains tax, increasing the business and occupation tax rate for professional services, and modifying the real estate excise tax.

His proposed biennial operating budget would significantly increase appropriations to higher education institutions and student financial aid. The Governor’s budgets also invest heavily in the state’s behavioral health system—including planning a partnership with UW’s health science schools to expand the workforce and clinical care through telemedicine and new clinical facilities, recovery efforts for Southern Resident Killer Whales, and steps to reduce greenhouse gas emissions.

The release of the Governor’s budget proposals represents the first step in a lengthy budget process. Lawmakers in the Senate and the House will have the opportunity to release their own budget proposals over the course of the 2019 legislative session – set to begin on Monday, January 14, 2019.

For more information regarding the UW’s current requests for state funding, please see OPB’s 2019-21 operating and capital request submissions on the State Budget Information page.

Stay tuned to the OPBlog for updates during the 2019 legislative session!

November Revenue Forecast Predicts Slower, But Increasing Growth

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The Economic and Revenue Forecast Council (ERFC) released their November revenue forecast. The projected Near General Fund-State (GF-S) revenue forecast for the 2017-19 biennium increased by $163.4 million. Projected revenue collections for the 2019-21 biennium increased by $195.5 million. The report projects higher personal income than the September revenue forecast, but slower growth.

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

  • $45.799 billion for the 2017-19 biennium, 17.3 percent more than the 2015-17 biennium
  • $50.002 billion for the 2019-21 biennium, 9.2 percent more than the 2017-19 biennium
  • $53.795 billion for the 2021-23 biennium, 7.6 percent more than the 2019-21 biennium

Some context behind the numbers:

  • Washington’s unemployment declined to 4.3 percent in October, an all-time low in the series that extends back to 1976.
  • The forecast expects 2.7 percent Washington employment growth this year compared to 2.9 percent in the September forecast. The forecast expects growth to decelerate gradually as the recovery matures and for employment growth to average 1.3 percent per year in 2019 through 2023.
  • The forecast estimates that Washington personal income in the second quarter of 2018 is $10.4 billion (2.4 percent) higher than the September forecast.
  • Cumulative GF-S revenue collections from September 11 through November 10, 2018 were $22 million (0.7 percent) higher than forecasted in September. The slower growth was primarily attributed to Revenue Act taxes, which make up the bulk of GF-S revenue and include sales taxes, business and occupation taxes, and certain tobacco products, coming in $25 million (0.9 percent) lower than forecasted in September.

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

Stay tuned to the OPBlog for updates on 2019-21 budget proposals and the legislative session!

September Revenue Forecast Shows Increased Revenue

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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 $348 million. Projected revenue collections for the 2019-21 biennium increased by $443 million. The forecast expects higher personal income and employment than the June revenue forecast.

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

  • $45.636 billion for the 2017-19 biennium, 16.9 percent more than the 2015-17 biennium
  • $49.806 billion for the 2019-21 biennium, 9.1 percent more than the 2017-19 biennium
  • $53.585 billion for the 2021-23 biennium, 7.6 percent more than the 2019-21 biennium

Some context behind the numbers:

  • Cumulative GF-S revenue collections from June 11 through September 10, 2018 were $147 million (3.0 percent) higher than forecasted in June.
  • Revenue Act taxes, which make up the bulk of GF-S revenue and include sales taxes, business and occupation taxes, and certain tobacco products, came in $137 million (3.3 percent) higher than forecasted.
  • The forecast expects Washington employment to grow 2.9 percent this year compared to 2.5 percent in the June forecast. The increase is primarily attributed to growing private services-providing sectors. Partially due to employment growth, personal income is also projected to be higher than the June forecast.

There will be one more revenue forecast this year, which will be released in November. The Governor will use the November forecast revenue estimates when crafting his proposed 2019-21 biennial budgets, which will be released in December.

Stay tuned to the OPBlog for updates on revenue forecasts and the upcoming 2019 legislative session!

July Economic & Revenue Update Indicates Continued Growth in Washington

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Last month the Washington state Economic and Revenue Forecast Council (ERFC) released their June revenue forecast. Cumulative major General Fund-State (GF-S) revenue collections were $189 million higher than the February revenue forecast.

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

  • $45.288 billion, for the 2017-19 biennium, 16.0% more than the 2015-17 biennium
  • $49.363 billion, for the 2019-21 biennium, 9.0% more than the 2017-19 biennium
  • $53.170 billion, for the 2021-23 biennium, 7.7% more than the 2019-21 biennium

Some context behind the numbers:

  • Cumulative real estate excise taxes (REET) were $25 million (8.0%) higher than forecasted.
  • Revenue Act taxes, which consist of sales, use, business and occupation (B&O), utility and non-cigarette tobacco products, make up the bulk of the GF-S revenue. Collections were $131 million (2.7%) higher than forecasted.

In July the ERFC released an economic & revenue update that showed a further increase in GF-S revenue collections. Here is how this update compares:

  • GF-S revenue collections for June 11 through July 10 were $41.1 million (2.4%) above the June forecast.
  • Revenue Act tax collections for the current period were $39.3 million (3.0%) higher than the June forecast.

Washington continues to lead the country in personal income growth. The U.S. Department of Commerce, Bureau of Economic Analysis (BEA) released state personal income estimates for the first quarter of 2018. These estimates showed Washington personal income rose to $434. 1 billion in the first quarter 2018 compared to $426.5 billion in the fourth quarter of 2017. With 7.4% growth rate, Washington was the highest among the states and the District of Columbia.

Check back with the OPBlog in September for future updates on revenue forecasts.

OPB Brief on Compromise 2018 Supplemental Budgets

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Leadership in the state House and Senate released their compromise 2018 supplemental budget proposals earlier this week—the capital proposal came out on Tuesday evening and the operating proposal on Wednesday evening.  With the release of these budgets, and with their subsequent passage by the legislature, lawmakers ended the legislative session on time, for the first time since 2014.

The compromise budgets make changes to the recently approved 2017-19 biennial capital budget, as well as the 2017-19 biennial operating budget, which was approved last June. An OPB brief comparing the compromise budgets to prior proposals from the House, Senate, and Governor is now available in the full brief.

In the coming weeks, OPB will post summaries of approved legislative proposals that were tracked by the University, as well as fiscal notes (objective estimates of a bill proposal’s fiscal impact on the University) that were completed during the 2018 session. Those will be posted on the OPB briefs page.

OPB Brief on Senate and House Leadership 2018 Supplemental Budget Proposals

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On Monday, leadership in the Senate released their 2018 supplemental operating and capital budget proposals. On Tuesday and Wednesday, leadership in the House followed with the release of their 2018 supplemental operating and capital budget proposals. The supplemental proposals include technical corrections and minor appropriation changes to the recently approved 2017-19 biennial capital budget, as well as the 2017-19 biennial operating budget, which was approved last June. They also build off Governor Jay Inslee’s proposals, which he released in December.

Please see this OPB brief for a detailed comparison of the supplemental budget proposals released thus far.

As a reminder, now that the House and the Senate have offered competing proposals, lawmakers will work toward negotiating and passing compromise budgets by the scheduled end of session, on March 8, 2018. Stay tuned to the OPBlog for updates during the remainder of the 2018 legislative session.

 

 

February Revenue Forecast Shows Largest Increase since Recession

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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!

Capital Budget Moving Through Senate

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A proposed state capital budget, SB 6090, passed out of the Senate Committee on Ways & Means with substitutes and may be voted on soon.  Last session, lawmakers came to a compromise on a proposed capital budget, but it was ultimately not passed due to a disagreement over a rural water rights issue. This proposal is the same as that proposed compromise, except it includes language proposed by the Governor before this session that would allow the UW and other agencies to be reimbursed for capital expenditures that occurred on or after July 1, 2017 in the absence of an approved capital budget last year.  A similar process is occurring in the House with HB 1075.  OPB will monitor any changes that occur on the House or Senate floor on passage of the budget(s).

Stay tuned to the OPBlog for updates on the legislative session, including the capital budget.