Chief
03-16-2007, 10:49 AM
http://columbian.com/news/state/APStories/AP03162007news115916.cfm
Mar 15, 5:21 PM EDT
By DAVID AMMONS
AP Political Writer
OLYMPIA, Wash. (AP) -- Washington's once-torrid economy is gradually cooling, but still is expected to produce another tax windfall of $126 million, driving the state's reserves to a record $2 billion, state revenue officials said Thursday.
The new projection, unanimously approved by the state Economic and Revenue Forecast Council, comes just a week after a separate Caseload Forecast Council report said lower demand for state services will reduce costs by nearly $240 million.
That means legislators and Gov. Chris Gregoire will have well over $360 million in unexpected new spending capacity - or to set aside as savings or to offer as modest tax relief.
The governor's budget director, Victor Moore, told reporters the administration supports a strong budget for schools, health care and other priorities, but also would like lawmakers to expand the state's reserves.
The governor's own $30 billion budget proposal, released last December and based on an assumption of a $1.9 billion projected surplus, suggested spending about $1.3 billion and leaving about $600 million in savings, including money in a hard-to-tap "rainy day" fund.
The Washington Budget & Policy Center, a private nonprofit organization, said the good news needs to be tempered with the sober knowledge that state government has a structural deficit, spending more each biennium that it has revenue coming in. Lawmakers keep afloat by using balances from previous budget years.
The newly announced revenue will "barely make a dent in the projected deficit" in the 2009-11 biennium and beyond, the group said. The new forecast is for $29.5 billion in revenue in the coming biennium, but lawmakers plan to spend more than $30 billion.
ChangMook Sohn, the state's chief economist and the council director, said the new forecast represents only minor changes from the November forecast. He said the state economy is still sound, with no recession in sight for the next two years.
Construction and home sales are lagging below the torrid pace of recent years, but haven't gone flat, he said.
Job growth remains strong in high-wage sectors, such as software and aerospace, he said. Overall, more than 73,000 jobs were added in the past year, for a 2.6 percent growth, outpacing the national growth rate of 1.6 percent, Sohn said.
Sohn said he expects $144.3 million in additional revenue to roll in by June 30 and a slight decline, about $18 million, from his November forecast for the new two-year budget period that begins July 1.
The new projected surplus now tops $2 billion for the first time, but much of it will soon disappear as lawmakers write their new two-year budget. House Democrats announce their plans next Tuesday and the Senate will follow a week later.
The reserve includes about $740 million that lawmakers set aside for pensions, education and health care for use in the upcoming budget.
The current budget is about $27 billion.
The council chairman, Rep. Jim McIntire, D-Seattle, said the economy remains strong, at least in the near-term, but that "since this is the Ides of March," he recommends caution to his budget-writing colleagues.
Sen. Joe Zarelli, R-Ridgefield, the Senate Republicans' budget chief, said the state should use the windfall to pay off "past due bills," such as pensions and park repairs, and put the rest in savings.
Rep. Ed Orcutt, R-Kalama, noted that the Gov.'s Council of Economic Advisers predicts $235 million less than Sohn in the two-year period beginning July 1. Lawmakers need to be careful about starting new spending that can't be sustained if the economy indeed cools, he said.
"Clearly, recession can happen ... but we are just expecting slow growth," Sohn said, adding that the two projections are within the margin of error for a $30 billion budget.
Moore said the governor wants to see the extra surplus to go into savings, but didn't rule out the Legislature spending some of the money saved by the lower caseload forecast.
In a statement released by her office, the governor said the new projection is "a good sign that our economy is working well. We will continue conversations with the Legislature about being responsible with our tax dollars, making smart investments based on what works and setting aside money for a rainy day."
**SCHNIPP**
yah
I know where they are getting this surplus from; your property taxes and mine!
God forbid that they figure out a way to refund some of ths to us homeowners!!
Mar 15, 5:21 PM EDT
By DAVID AMMONS
AP Political Writer
OLYMPIA, Wash. (AP) -- Washington's once-torrid economy is gradually cooling, but still is expected to produce another tax windfall of $126 million, driving the state's reserves to a record $2 billion, state revenue officials said Thursday.
The new projection, unanimously approved by the state Economic and Revenue Forecast Council, comes just a week after a separate Caseload Forecast Council report said lower demand for state services will reduce costs by nearly $240 million.
That means legislators and Gov. Chris Gregoire will have well over $360 million in unexpected new spending capacity - or to set aside as savings or to offer as modest tax relief.
The governor's budget director, Victor Moore, told reporters the administration supports a strong budget for schools, health care and other priorities, but also would like lawmakers to expand the state's reserves.
The governor's own $30 billion budget proposal, released last December and based on an assumption of a $1.9 billion projected surplus, suggested spending about $1.3 billion and leaving about $600 million in savings, including money in a hard-to-tap "rainy day" fund.
The Washington Budget & Policy Center, a private nonprofit organization, said the good news needs to be tempered with the sober knowledge that state government has a structural deficit, spending more each biennium that it has revenue coming in. Lawmakers keep afloat by using balances from previous budget years.
The newly announced revenue will "barely make a dent in the projected deficit" in the 2009-11 biennium and beyond, the group said. The new forecast is for $29.5 billion in revenue in the coming biennium, but lawmakers plan to spend more than $30 billion.
ChangMook Sohn, the state's chief economist and the council director, said the new forecast represents only minor changes from the November forecast. He said the state economy is still sound, with no recession in sight for the next two years.
Construction and home sales are lagging below the torrid pace of recent years, but haven't gone flat, he said.
Job growth remains strong in high-wage sectors, such as software and aerospace, he said. Overall, more than 73,000 jobs were added in the past year, for a 2.6 percent growth, outpacing the national growth rate of 1.6 percent, Sohn said.
Sohn said he expects $144.3 million in additional revenue to roll in by June 30 and a slight decline, about $18 million, from his November forecast for the new two-year budget period that begins July 1.
The new projected surplus now tops $2 billion for the first time, but much of it will soon disappear as lawmakers write their new two-year budget. House Democrats announce their plans next Tuesday and the Senate will follow a week later.
The reserve includes about $740 million that lawmakers set aside for pensions, education and health care for use in the upcoming budget.
The current budget is about $27 billion.
The council chairman, Rep. Jim McIntire, D-Seattle, said the economy remains strong, at least in the near-term, but that "since this is the Ides of March," he recommends caution to his budget-writing colleagues.
Sen. Joe Zarelli, R-Ridgefield, the Senate Republicans' budget chief, said the state should use the windfall to pay off "past due bills," such as pensions and park repairs, and put the rest in savings.
Rep. Ed Orcutt, R-Kalama, noted that the Gov.'s Council of Economic Advisers predicts $235 million less than Sohn in the two-year period beginning July 1. Lawmakers need to be careful about starting new spending that can't be sustained if the economy indeed cools, he said.
"Clearly, recession can happen ... but we are just expecting slow growth," Sohn said, adding that the two projections are within the margin of error for a $30 billion budget.
Moore said the governor wants to see the extra surplus to go into savings, but didn't rule out the Legislature spending some of the money saved by the lower caseload forecast.
In a statement released by her office, the governor said the new projection is "a good sign that our economy is working well. We will continue conversations with the Legislature about being responsible with our tax dollars, making smart investments based on what works and setting aside money for a rainy day."
**SCHNIPP**
yah
I know where they are getting this surplus from; your property taxes and mine!
God forbid that they figure out a way to refund some of ths to us homeowners!!