State revenue forecast council cuts projections for 2015-17 and 2017-19. Cites further risks to forecast.

Today’s revenue forecast should not have come as a surprise. Economic uncertainty abounds. Here’s the press release takeaway:

The General Fund-State (GF-S) revenue forecast has been decreased by $67 million for the 2015-17 biennium and decreased by $442 million for the 2017-19 biennium.

Economic news continues to suggest risks to the forecast. Both the U.S and global economy have slowed, the stronger dollar has had a negative impact on exports, and manufacturing activity has weakened. On the upside, hourly wages are starting to increase, housing permits have room for additional growth, and lower oil and gasoline prices are a positive for consumers.

What may be more surprising is the strength of revenue growth.

General Fund-State revenues are expected to grow 10.3% between the 2013-15 and 2015-17 biennia and 8.0% between the 2015-17 and 2017-19 biennia.

As we pointed out in our post on the most recent collection report.

[The report that collections slightly beat projections is] generally good news, but will have to be evaluated in the context of forecasts for the overall economy. While the state continues to show relatively strong economic performance, nationally the signs are less auspicious.

There’s a lot of great data and analysis in today’s report. Here’s the bullet-point explanation of the changes in revenue projections:

  • Forecasted revenue for the current (2015-17) biennium was lowered by $67 million, a decrease of only 0.2%. Decreases in forecasted retail sales and B&O taxes were partially offset by the $39 million collection surplus, an increase in forecasted real estate excise taxes and increased distributions of Lottery funds to the GF-S due to the recent record Powerball jackpot.
  • Forecasted GF-S revenue for the 2015-17 biennium is now $37.137 billion, an increase of 10.3% above that of the 2013-15 biennium. ¬†
  • Forecasted revenue for the 2017-19 biennium was lowered by $442 million, a decrease of 1.1%. Most of the decrease was is retail sales and B&O taxes. Forecasted property tax receipts also suffered a $24 million decline due to forecasted inflation of less than one percent in the second quarter of 2016, which lowered the allowed 2017 levy and all future levies (the state levy is only allowed to increase by 1% per year or the rate of second quarter inflation, whichever is less).

This will be the forecast that guides the drafting of a supplemental budget. The next scheduled forecast is June 15, 2016. Associated Press story here.