With so much dour economic news these days you want to latch onto any ray of sunshine breaking through.
We thought we saw such a beam when Washington state's Department of Revenue issued a press release Sept. 23 saying tax revenues had increased in fiscal year 2011, which ended June 30. After a peak of $17 billion in FY2008, state tax revenues dipped to $15.6 billion in FY2009 and $15.1 billion in FY2010, so an increase of 5.9 percent in FY2011 to $16 billion seems to be a sign of hope.
Granted we don't want state lawmakers and administrators to run out on any spending spree. Let's take a wait and see approach and hope for the best.
But contrast Revenue's news with a release issued just eight days before from the state's Economic and Revenue Forecast Council.
The release's title says it all: “The Outlook has Weakened Significantly since the June Forecast.” Getting our state back to normal economically is “like a mirage in the desert,” consumers and businesses are gripped by “fear and uncertainty” and every time our state appears to “break out of the malaise, it has been sucked right back in.”
The Council's release states Washington's job market was weaker than expected in June, adding 8,300 jobs instead of a projected 13,600 while revenues collected through Sept. 10 were $40 million below expectations. And the preliminary total of General Fund-State revenue for the 2009-11 biennium came in $25 million lower than forecasted.
The Council provides a baseline forecast for 2011-13 biennium of $30.311 billion, $1.4 billion lower than expected, and another baseline of $30.295 billion based on an assumed 2.7 percent real gross domestic product growth in 2013 instead of 3.2 percent. They also provide their “optimistic” and “pessimistic” projections.
It's apocalyptic gloom and doom, and it led Gov. Christine Gregoire to call a special legislative session in November to make more cuts to the 2011-13 biennial budget.
But while the Council figures are for the entire state general fund budget, including fees and federal monies, Revenues are for taxes only, 56.3 percent of the state's revenue sources. Add the 2009 and 2010 figures together, that's $30.7 billion in taxes collected in that biennium.
That is virtually equal to what the Council forecast for all of state revenue in 2009-2011. And those were off years.
Furthermore, Revenue notes business and occupation tax collections increased $3 billion, 16.9 percent, likely a result of the 31,352 new businesses added as of July 1, 2011. Also up were retail sales collections, 4.6 percent to $7.2 billion, alcoholic beverage sales, 17.1 percent to $331 million and cigarette and tobacco sales, 13.7 billion to $479 million.
There were decreases too in motor fuels collections ($1.2 billion) and real estate tax ($380 million), but overall, promising statistics.
We're not economists, but it seems there is a disconnect somewhere. The Council makes dire predictions and lawmakers respond with big cuts to services and education, only to have Revenue show those predictions and moves might not necessarily needed to be so dramatic.
And consequently those cuts might have been better assessed. Is there some kind of economic gamesmanship going on in Olympia?
It's good to budget conservatively, especially in today's economic climate, but we think it might be more helpful to be more realistic instead of swinging between optimistic and pessimistic. This approach hasn't produced any new solutions, and that's what's needed now more than the status quo.
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