State revenues continued to exceed expectations in the May Economic & Revenue update released by the state Economic and Revenue Forecast Council late last week.
The May report shows collections up $173.2 million for the most recent monthly reporting period, or 7.6 percent higher than what was forecasted in February. Including the months since February, the cumulative total is now $428.5 million or 7.5 percent above the forecast. The influx of tax revenue is in part due to a considerable increase in inflation that was unforeseen by the February revenue forecast.
On inflation, the report showed Seattle-area consumer price inflation rate up 9.1 percent between April 2021 and 2022, compared to the national average of 8.2 percent. The greatest increase of inflation has been among food and energy costs, while core prices that exclude those have also increased 7.8 percent. Despite these increases, the report indicated that a historically high accumulation of savings and healthy personal income growth has to date offset changes in consumer and business spending behavior.
Meanwhile, the retail trade sectors saw increased revenues from gas stations and convenience stores where collections were up 17 percent and 9.1 percent at electronics and appliances stores. Real estate excise taxes also grew considerably, up 39 percent above projections.
The housing market remained hot in the first quarter of the year, as construction permits for multi-family homes continued a three quarter streak of record highs. Home prices continued to climb rapidly in Seattle, up 26.6 percent over the year.
A new revenue forecast will be released next month, with two more in September and November. The governor will use the November forecast to construct his budget proposal for the state Legislature to consider when it convenes for the 2023 legislative session.