The Economic and Revenue Forecast Council reported last week that state revenues were coming in above the level predicted in the June revenue forecast.
Major General Fund-State (GF-S) revenue collections for the July 11, 2021 – August 10, 2021 collection period came in $84.5 million (4.1%) higher than forecasted in June. Cumulatively, collections are now $89.8 million (2.1%) higher than forecasted.
The state economy continues to do well, the ERFC notes.
We have two months of new Washington employment data since the June forecast was released. Total nonfarm payroll employment increased 48,800 in June and July which was 900 more than the increase of 48,000 expected in the forecast. Washington employment is now 143,000 (4.1%) lower than at its February 2020 peak. Private services-providing sectors added 40,800 jobs in June and July. The manufacturing sector added 900 jobs despite the loss of 500 jobs in aerospace manufacturing. Construction employment increased by 2,000 jobs. State and local government employment increased by 5,000 jobs in the two-month period and federal government employment increased by 100 jobs.
Washington’s unemployment rate declined to 5.1% in July from 5.2% in June. The unemployment rate is down significantly from the 16.3% rate reached in April 2020 which was an all-time high in the series that dates back to 1976. At the business cycle peak in February 2020 the Washington unemployment rate was 4.1%.
Much more in the update.
The Washington Research Council writes,
Earlier this month, Jason Mercier of the Washington Policy Center posted a March 26 memo from Rep. Chopp that set out the Legislature’s options for a capital gains tax. For each of the options, Rep. Chopp listed among the cons that legislators could be “attacked for raising taxes while state is ‘awash with money.’”
Indeed, by the time the memo was written, it was clear that state revenues were growing despite the recession.
WRC senior analyst Emily Makings adds,
Since Rep. Chopp wrote his memo (and since the 2021–23 operating budget was enacted), revenues have increased substantially. The June 2021 forecast estimates that NGFO revenues are above the Feb. 2020 forecast by $4.886 billion (through 2023–25). That includes revenues from the enacted capital gains tax. If you remove the capital gains revenues, the June 2021 forecast is $3.631 billion above the Feb. 2020 forecast.
And, as the Economic and Revenue Forecast Council reported yesterday, general fund–state revenue collections are now $89.8 million higher than forecast in June.
Awash with money. Indeed.