State tax collections are projected to grow at a slow rate in the coming months, according to latest projections published today in the state’s Economic and Revenue Forecast Council quarterly economic forecast.
The new projection adds $337 million to the state budget through June 2027, just 0.2 percent more than was forecasted in November. The Legislature on Friday will get a similar update to projections for demands on state entitlement programs, which could subtract from the bottom line if demands are up or add to it if demands are down.
Lawmakers in the House and Senate will use these updates to finalize their 2024 supplemental operating budget proposals. The Senate’s plan is expected to be released as soon as Sunday afternoon and heard in the Ways and Means Committee on Monday.
While inflation is moderating, pressure on interest rates is declining, and no recession is projected, various economic headwinds face the state. Washington’s low unemployment rate is ticking up and personal income growth is expected to moderate. Total state annual revenue growth, which hasn’t dipped below four percent in the past decade, isn’t projected to touch four percent through mid-2027.
Not reflected in Wednesday’s forecast is the presence of six citizen’s initiatives to overturn policies passed by the Legislature in recent years that have generated hundreds of millions in dollars for state spending. They include taxes on carbon emissions and capital gains and a payroll tax for long term care.
Once budget leaders in the House and Senate unveil their budgets, they will look to produce a compromised budget to advance to the governor before adjourning Sine Die on March 7th.