Reactions to $2.6 billion bump in revenue forecast

Yesterday’s significant boost in expected state revenues through the 2021-2023 biennium renewed legislative budget discussions. The Seattle Times reports,

Republicans, who are in the minority in the Legislature, have unsuccessfully resisted several tax increases pushed by Democrats in recent year. Given the new forecast, they called again on Wednesday for tax cuts.

“It think it’s time to start looking at tax relief,” said Rep. Ed Orcutt, R-Kalama, at the meeting.

Meanwhile, Sen. Christine Rolfes, D-Bainbridge Island and chief Democratic budget writer in the Senate, cautioned that about taking too much from just one forecast.

As the ST reports, not much – make that nothing – is likely to be done in the short term. There will be another forecast in the fall. And these are, of course, done every quarter.

But Republicans will continue to press their case.

Sen. Lynda Wilson (17th District), Republican leader on the Senate Ways and Means Committee and a member of the state Economic Revenue and Forecast Council, offered this statement about the June 2021 forecast.

“When the March forecast came out, Republicans said there was absolutely no need for more taxes, based on the new revenue projections and all the federal stimulus money coming in. The majority Democrats didn’t listen to us, or to the people of the state. They went ahead with an unconstitutional state income tax and climate policies that amount to regressive new taxes…

“If the Legislature is going to have a special session this year, let’s make it about easing the tax burden on families, workers and employers, instead of adding to the string of majority tax increases.”

Washington Research Council economist Kriss Sjoblom gets points for predicting a nontrivial increase in projected revenues. In a blog post Tuesday, he said,

The ERFC will meet tomorrow to revise its forecasts of state revenues… Over the last three months, collections have exceeded forecast by $644.4 million (9.6%). I expect ERFC will increase it’s forecast for the 2021-23 biennium by significantly more than that amount.

After the forecast came out, Sjoblom wrote,

From 2017–19 to 2019–21, the forecasted NGFO growth rate is now 15.4%. From 2019–21 to 2021–23, the forecasted NGFO growth rate is 9.9%. From 2021–23 to 2023–2025, the forecasted NGFO growth rate is 6.4%.

As always, the ERFC also adopted optimistic and pessimistic alternative forecasts for the general fund–state. Under the optimistic scenario, revenue exceeds the baseline forecast by $104 million in 2019–21 and by $3,444 million during 2021–23. Under the pessimistic scenario, revenue falls short of the baseline forecast by $81 million during 2019–21 and by $3,391 million during 2021–23. The ERFC assigns a 25 percent probability to the optimistic scenario and a 25 percent probability to the pessimistic scenario.

The case for new taxes does appear to be weak and weakening.