Politics & Government

State Revenue Forecast Turns Up Another $698 Million Short

Local officials weighed in on what the decline could mean for Redmond residents.

The state’s budget hole got deeper Thursday, with a lowered revenue forecast that reflects a “fragile” economic recovery held back by slow job growth, sluggish construction and now the effects of Middle East unrest and the earthquake and tsunami disaster in Japan.

For the current 2009-2011 budget, revenue is expected to be $28 billion, which is $80 million less than the state’s previous projection in November, according to the Economic and Revenue Forecast Council.

Looking ahead to the next two-year budget, which lawmakers are grappling with now, revenues are expected to be $31.9 billion, which is $698 million less than the previous forecast.

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Even this latest projection is uncertain because of what’s happening around the globe.

“First, we had the volatility in oil prices because of political unrest in the Middle East,” said Arun Raha, the state’s chief economist, in a statement accompanying the forecast. “Now we have the tragedy in Japan, the world’s third largest economy, and one of the state’s leading trade partners."

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State legislators from the 45th Legislative District were quick to respond to the new deficit forecast, all agreeing that cuts are coming, and they will be painful.

Rep. Larry Springer (D-Kirkland) wrote in an e-mail that the forecast probably means further cuts to essential services many Washington families need.

“In the next several days, we will work even harder to find the most efficient way to deliver services across the state in order to minimize the impact of those cuts,” Springer wrote. “It continues to be an uphill battle.”

First-term Sen. Andy Hill (R-Redmond) had a more optimistic take on the revenue shortfall. The state does not have a revenue problem, Hill said; the problem is spending promises during the past four years that were unsustainable.

“This means there will be painful cuts that hurt real people,” Hill said. “The real challenge will be to make reforms that will ensure that we don’t find ourselves in this same position two years from now. I think that with a bipartisan effort, we can work to forge a solution that does as little damage as possible while setting the state on a track for success in the coming years.”

In Redmond, finance director Michael Bailey said the cuts probably won't have much of a direct effect on the city's bottom line. State funding makes up only 2 percent of the city's $146-million general budget, and Bailey said the legislature has not yet raised the possibility of reducing those contributions.

"When the state has financial difficulties, it affects the cities more indirectly than directly … it’s more muted,” he said.

Bailey said one place the city could see a drop in state funding is with capital improvement projects, such as the Redmond Central Connector. But Bailey said the city has experienced a decline in state funding for these projects for quite some time and has adjusted its own budget accordingly.

All in all, Bailey said he believes the state is taking the right steps to adjust for the revenue shortfall.

“The state basically needs to do some of what we’ve been doing, which is taking a hard look at what the priorities are,” he said. “It’s pretty fundamental change, and so I think it needs a pretty fundamental response.”

State lawmakers will have to figure out where to make cuts as they deal with the lowered projections. The legislative session is set to run through April 24, though there's some doubt it will wrap up in time.


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