The $2.6 billion addition to state budget revenues projected by the Economic and Revenue Forecast Council earlier this week extended the state’s revenue recovery. The Washington Research Council writes that state revenues are now well above pre-pandemic levels.
Through 2023–25 (the second biennium of the outlook), the forecast increased by $4.881 billion ($838 million in 2019–21, $1.798 billion in 2021–23, and $2.245 billion in 2023–25). Of that, $3.675 billion is due to economic changes and $1.206 billion is due to legislative changes (mainly the capital gains tax).
Similarly, over the six-year period, revenues are up $4.886 billion over what had been forecast in Feb. 2020 (the last forecast before the pandemic).
The WRC produced two charts detailing the changes in the revenue forecast.
The increases are substantial, obviously, and far above what lawmakers expected in January. Still, The Lens reports that tax reductions are not currently under consideration.
A Pew Charitable Trust study earlier this year found Washington state’s revenue grew more over the past year than any other state in the country. Now, the state Economic and Revenue Forecast Council’s (ERFC) latest forecastestimates the state will receive billions more in tax revenue through 2023 than what was previously expected.
Yet while so far six states have already sought to cut taxes, statements made by key ranking state budget writers make it uncertain whether Washington state residents will see a direct tax reduction.
Senate Ways and Means Chair Christine Rolfes (D-23) said at ERFC’s June 23 meeting that “We’ll get new numbers in the fall, and those are the numbers the governor leads with. Certainly this is good news, but I wouldn’t start writing a budget based on these numbers today.”
We certainly counsel prudence, which is why we think it’s a mistake to base any part of the budget on a controversial and possibly unconstitutional capital gains tax.
Rolfes opposite number in the House similarly expresses skepticism when it comes to tax relief.
House Appropriations Chair Timm Ormsby (D-3) offered similar reservations regarding the revenue estimates. “These are very good numbers. Take them for what they are, knowing that it is a snapshot and we have been through a wild ride.”
Very good numbers, for sure. With another forecast due in September, we hope the trend remains strong and the budget writers remain open to tax relief.
