State revenue collections fall $435 million below forecast in latest monthly update, in part reflecting tax deferrals.

The effects of the lockdown materialized in yesterday’s Economic and Revenue Update.

This is the first collection report to show large negative revenue impacts from the COVID-19- related economic shutdowns. Major General Fund-State (GF-S) revenue collections for the April 11 – May 10, 2020 collection period came in $434.6 million (22.5%) lower than the February forecast. About half of this month’s shortfall, however, was due to DOR-approved deferrals of payments for a large number of monthly filers and all quarterly filers. These payments, totaling approximately $200 million, are expected to arrive before the end of June. Cumulatively, collections since February 11 are now $428.5 million (8.7%) below the forecast. Adjusted for the deferred payments, the cumulative shortfall is approximately $229 million (4.7%).

As usual, the update contains quite a bit of good information. Of the national economy, the Economic and Revenue Forecast Council writes,

Almost all economic data were negative this month. Nationally, the labor market saw the unemployment rate reach its highest level in the history of the series which dates back to January 1948. Residential construction and sales weakened, manufacturing activity contracted and construction and service sectors slowed.

National employment fell by 20.5 million net jobs in April, reflecting the impacts of business closures and other measures related to the containment of COVID-19. Employment data for February and March were revised down by 214,000 jobs. Sectors with the largest job losses in April included accommodation and food service (-6.3 million), retail trade (-2.1 million),

administrative and support services (-1.5 million), health care (-1.4 million), manufacturing (-1.3 million), arts, entertainment and recreation (-1.3 million), other services (-1.3 million), construction (-1.0 million) and local government (-0.8 million).

In Washington,

The decline in Washington employment in April was unprecedented in its depth and speed (see figure). We have four months of new Washington employment data since the February forecast was released. Total nonfarm payroll employment fell 453,000 (seasonally adjusted) in April and 446,200 in the four-month period. The February forecast expected an increase of 27,500 in January, February, March, and April. Private services-providing sectors lost 359,300 jobs in the four-month period. Construction employment declined by 47,200 jobs and manufacturing declined by 27,700 jobs including the loss of 8,300 aerospace jobs. Government payrolls declined by 11,100 jobs in January, February, March, and April.

Here’s the ERFC bulleted summary:

  U.S. employment decreased by 20.5 million jobs in April; the unemployment rate rose to 14.7%.

  Real U.S. GDP growth declined 4.8% in the first quarter.

  The decline in Washington employment in April was unprecedented.

  The ISM-WW Index declined further into negative territory.

  Washington car and truck sales plummeted to the lowest level in the history of the series.

  This is the first collection report to show large negative revenue impacts from the COVID-19-related economic shutdowns.

  Major General Fund-State (GF-S) revenue collections for the April 11 – May 10, 2020 collection period came in $434.6 million (22.5%) lower than the February forecast.

  About half of this month’s shortfall was due to DOR-approved deferrals of payments for a large number of monthly filers and all quarterly filers. These payments, totaling approximately $200 million, are expected to arrive before the end of June.

  Cumulatively, collections since February 11 are now $428.5 million (8.7%) below the forecast. Adjusted for the deferred payments, the cumulative shortfall is approximately $229 million (4.7%).