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Revenue forecast shows $238 million drop; special session unlikely

• Published September 17, 2009

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The news is once again bad, just not terrible.

Revenue forecaster Arun Raha of the Office of the Economic and Revenue Forecast repeated his view today that the recession appears over, but that state revenues will be lower than he expected in June.

"It will be a while before we get back to where we fell from," Raha said this morning, suggesting some sectors like commercial construction will lag the recovery, which remains fragile. "It won’t feel like a recovery until at least the middle of 2010."

His new September report says revenue collections through June 30 were $6.8 million less than expected in his June forecast. It goes on to make another $230.9 million downward adjustment in the expected level of revenue through June 2011, pegging that at $29.6 billion for the two-year budget period. ( Here is his news release.

Lawmakers serving on the Economic and Revenue Forecast Council heard the report from Raha but don't want to rush into a special session to fix the budget situation. And Victor Moore, budget director for Gov. Chris Gregoire, said there is enough money in state accounts to wait until January, when lawmakers can be thoughtful about the cuts they make in spending.

Two Democrats on the council, Sen. Craig Pridemore of Vancouver and Rep. Ross Hunter of Medina, and one Republican, Rep. Ed Orcutt of Kalama, all agreed they should wait until legislators are in town in early January for a 60-day regular session.

But Orcutt said budget writers need to get in gear well ahead of January so that lawmakers can act quickly on cuts, making each reduction add up greater over a longer period of time.

The new revenue numbers mean that the state will be $200 million in the red by June 2011, even with the state's Rainy Day fund money used to balance books. Moore said the state would need about $750 million to $1 billion in new revenue to bring the state out of red ink and to an appropriate level of finances, but he did not call for raising revenues.

What all of this eventually means, we'll have to get into later, and my reporting partner at The News Tribune, Joe Turner, is doing a formal story for tomorrow's paper.

Gov. Gregoire ordered agencies in June to cut an additional 2 percent of payroll costs to accommodate the loss of revenues outlined in the June forecast. With revenue collections falling and caseloads rising, Gregoire more recently has expressed worry that more cuts could be required in January when lawmakers return to session.

That sounds like the same approach budget writers will be taking. Sen. Rodney Tom, the second-ranking Democrat on Senate Ways and Means, and Rep. Kelli Linville, top Democrat on House Ways and Means, said they are looking for efficiencies in government first. Linville said lawmakers must show voters they've made government lean, efficient and reduced its size before they ask for more money.