State tax revenues continue to come in above forecast, strengthening the case against tax increases.

The Economic and Revenue Forecast Council today reported that tax revenues are coming in higher than forecast in November.

Revenue Act collections for the current period came in $115.7 million (8.8%) higher than the November forecast, as the decline in taxable activity from decreased federal stimulus and increased pandemic-related restrictions turned out to be less than expected. 

This graph from the report shows the strength of the revenue (not economic) recovery.

Here are ERFC’s bullet points from the monthly update.

  U.S. employment decreased by 140,000 jobs in December; the unemployment rate remained at 6.7%.

  U.S. initial claims for unemployment insurance increased by 181,000 in early January.

  U.S. manufacturing activity expanded for a seventh consecutive month.

  U.S. residential construction activity remained strong in November.

  Washington employment declined in December following a smaller than expected increase in November.

  Washington housing construction remained moderate but Seattle-area home prices increased rapidly.

  Major General Fund-State (GF-S) revenue collections for the December 11, 2020 – January 10, 2021 collection period came in $260.7 million (14.9%) higher than forecasted in November, primarily due to Revenue Act and Real Estate Excise Tax collections.

  Cumulatively, collections are now $323.1 million (6.7%) higher than forecasted.

Although lawmakers continue to float proposals for tax increases, the revenue numbers confirm that the state budget balances for four years without adding the burden of additional taxes to households and businesses continuing to struggle. As the Washington Research Council pointed out before these new revenues were reported, 

…it’s important to remember that the 2019–21 budget still balances without any additional action from the Legislature. (It also easily balances over four years if the rainy day fund is used.)

This is good news.