Dampened sales, business and occupation tax activity is partly to blame for a weakened revenue outlook released today. The state’s Economic and Revenue Forecast Council adopted an updated revenue forecast this afternoon that projects slight declines in the current 2023-25 biennium and the upcoming 2025-27 biennium. The total amount of the underlying 2025-27 biennium is now forecasted to be $71.5 billion.
In addition to decreases in sales and business tax collections threatening the budget outlook, the forecast was further challenged by a drop in consumer sentiment and confidence about future business conditions, job availability, and income during May and June. Inflation also appears to be increasing again despite signs that it may be slowing earlier this year, with Seattle-area consumer price inflation outpacing the national average.
Projections for the Workforce Education Investment Account, which since its establishment in 2019 has paid for the WA Grant and new degree programs in high demand fields, increased by $24.1 million in the current biennium and $33.9 million in the 2025-27 budget cycle.
In a presentation of the June forecast, Dave Reich, Executive Director and Chief Economist for the Council, told council members that the risks to the forecast include Initiative 2109, which would eliminate the state’s capital gains tax and eliminate a fund source for budget writers.
The next revenue forecast is expected in September, following budget request submissions to the governor’s budget office, with another coming in November that will inform the governor’s budget for the 2025-27 biennium.