Friday’s revenue forecast continued the string of upward adjustments, adding nearly $2 billion to projected collections. The Economic and Revenue Forecast summarizes the changes.
Summing the changes to the GF-S, ELTA, OPA and WEIA forecasts, total state revenue subject to the budget outlook process is expected to increase by $898 million in the 2021-23 biennium and $965 million in the 2023-25 biennium.
The final total of GF-S, ELTA, OPA and WEIA revenue for the 2019-21 biennium is $53.132 billion, 15.3% higher than 2017-19 biennial revenue. Forecasted total revenue for the 2021-23 biennium is $60.238 billion, an increase of 13.4% over 2019-21 biennial revenue, and forecasted total revenue for the 2023-25 biennium is $64.047 billion, an increase of 6.3% over expected 2021-23 biennial revenue.
The Washington Research Council explains the account totals.
Budget reports from legislative fiscal committees typically roll up four accounts: the general fund–state, the education legacy trust account, the Washington opportunity pathways account and the workforce education investment account. Budgeteers refer to the roll-up as “funds subject to the outlook” (NGFO). Under the four-year balanced budget requirement, positive ending balances are required for both the current and the following bienniums for the NGFO overall.
It’s a lot of money, as the following chart shows.
An upward adjustment of some sort was expected following the string of collections reports showing revenues coming in ahead of forecast. The ERFC writes,
State taxable activity has been much stronger than expected. Cumulative major General Fund-State (GF-S) collections from September 11 through November 10, 2021 came in $292 million (7.3%) above the September forecast.
Most of the collections in excess of the forecast were Revenue Act taxes (the main category of GF-S taxes including retail sales and use, business and occupation (B&O), public utility and non-cigarette tobacco products). Cumulative Revenue Act collections came in $167 million (4.9%) higher than forecasted in September. Federal stimulus and pent-up demand caused Revenue Act collections to spike in the spring. While seasonally adjusted collections have diminished since then, they have not diminished to the extent expected in September.
The Associated Press reports,
Republican legislative members of the Economic and Revenue Forecast Council said in response to the strong growth, tax cuts should be part of any final plan. Democratic budget writers said nothing is off the table but expressed caution.
Rep. Timm Ormsby, D-Spokane, a member of the council and the chief budget writer for the House, noted last year the state was looking at potential shortfalls in the billions and said the latest forecast “provides me with relief more than optimism.”
“This is a pretty volatile time,” he said. “I believe that it requires caution not exuberance.”
This is the forecast on which the governor will base his supplemental budget proposal, which will be released next month.