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WSU Government Relations Newsbeat

State revenue forecast dips

While projected revenues for the current 2021-23 state biennial budget were increased, projections from the Washington State Economic and Revenue Forecast Council released this afternoon lowered expected collections by $495 million in the 2023-25 biennium. The Council’s forecast projects revenues in the current biennium to increase by about $43 million, bolstering the underlying budget to $63.2 billion.

Lower personal income was a driving factor in the concerning outlook, which has prompted a reduction in retail sales. Additionally, the shortfall can be contributed to a slowing in residential construction has reduced construction employment and construction sales. As interest rates have increased to combat inflation, they too have negatively impacted the forecast as real estate activity and associated taxes have slowed. Finally, $117 million of the $495 million revenues reduction is related to a decision from the state’s Board of Tax Appeals which granted a sales tax exemption to certain machinery and equipment sales related to research and development work.

The forecast does not project a recession. However, downside risks outweigh upside risks. The report projects a 35 percent likelihood of a budget deficit of $5 billion.

The forecast was not all bad news, as projected employment in the state saw improvements. It noted improvement could be realized with increased supply chain recovery, a faster resolution to the Russian invasion of Ukraine, and increases in consumer spending.

Another revenue forecast will be released in November, which will be used by the governor to craft his budget proposal to be considered by the state Legislature when it convenes for the 2023 legislative session in January.

Additional funding provided for Vancouver Life Sciences Building to mitigate inflationary costs

Facing escalating costs for construction materials, WSU has received $2.2 million in requested funding announced this week by the state’s budget office to mitigate this unanticipated increase associated with the construction of the Life Sciences Building on the WSU Vancouver campus.

The building will house labs and lecture spaces primarily for STEM-disciplines and was first approved for design and costing in 2018, prior to the current inflationary period. Since then, structural steel and drywall have seen a 30 percent increase with some materials seeing even greater increases. The total value of these escalated costs has reached approximately $10 million and in response the project team has implemented several cost-mitigating strategies such as reducing the building height and overall square footage as well as combining utility and foundation excavations.

The funding provided by the Office of Financial Management was allocated from the Capital Community Assistance Account, an account established to help address inflationary costs associated with state construction projects. This necessary support will help furnish 12,000 square feet that would otherwise be left unfinished.

The 60,000 square foot Sciences Building on the WSU Vancouver campus is set to open in Spring 2024.

State revenue projects slowing growth

In the first economic forecast since the adjournment of the Legislature this year, the Washington State Economic and Revenue Forecast Council released their quarterly revenue estimates yesterday that project an increase of $1.4 billion in the current 2021-2023 baseline. This bolsters the budget to total $64.1 billion, an 18.9 percent increase in revenue over the last budget in 2019-2021.

While this initial increase in the current budget is encouraging, the outlook for the upcoming 2023-2025 biennium saw a modest increase of $642 million, a 4.5 percent increase in revenue from the current budget totaling nearly $66 billion.

The modest increase in the next biennium may be concerning when considering the threats to the economy that have occurred since the February forecast, including supply chain issues in addition to inflation and subsequent interest rate hikes. The potential risks to the budget identified by the June forecast include the continuation of rising interest rates that push the economy into recession, which has often occurred in similar historical circumstances, and the potential intensification in Russia’s invasion of Ukraine. Despite these potential risks, the forecast suggested upsides that include the easing of supply chains and the slowing of inflation as well as a de-escalation of the Ukraine invasion.

In addition to their primary forecast, the ERFC produces two alternative forecasts seen through an optimistic and pessimistic outlook that are most often weighed with a 15 percent chance of occurring. While the optimistic forecast showed an even greater increase in 2023-2025 budget than the primary forecast, the pessimistic forecast projected a $6 billion deficit in the upcoming budget and the ERFC increased the likelihood of that realization to 35 percent because of the accumulating downside risks.

The next forecast will be released in September and will be followed by the final forecast of the year in November which the governor will use to craft his 2023-2025 budget proposal.

Lind Field Day makes triumphant return

Following a two year interruption because of the pandemic, wheat growers and industry partners gathered in Lind, Washington last week for the 104th Lind Field Day, organized by WSU’s College of Agricultural, Human, and Natural Resource Sciences. The group converged at WSU’s 1,300-acre Dryland Research Station in Lind, first established in 1915 to support dryland farming with research on hundreds of wheat varieties, alternative crops such as legumes and oilseed crops, soil fertility, and erosion control.

The Field Day included tours in spring and winter wheat plots, where participants visited with university experts to hear about their work in breeding new varieties, testing for yields, resistance to drought and disease, and their effectiveness as a final product in baking, nutrition, and other commercial considerations. While it’s been a largely disease-free year to date, in part thanks to the abundance of rain, growers were asked to monitor their fields for stripe rust and other diseases and to send samples to WSU for disease diagnosis.

Researchers also presented on the latest in weed sensing sprayer technology that utilizes blue light sensors to separate crop from weed. WSU researchers have witnessed a 70 to 90 percent reduction in herbicide and pesticide application at its research farm in Davenport. The new sprayer technology utilizes a series of sensors that have hundreds of small sensors to analyze the plants. Researchers reported there are still bugs to be worked out of these systems and that more technological improvements are on the way.

The Washington agricultural economy recorded exports of nearly $1 billion in wheat alone last year. The experimentation, counsel, and trial and error offered by WSU through the work of the Lind Station helps the industry feed the world and generate economic activity for their communities.

Lind Field Day has been cancelled only three times in 107 years, twice for the COVID-19 pandemic and once for the Mount St. Helens eruption. WSU holds field day events at multiple locations across the state and for multiple crops as part of its efforts to bring the research it conducts in the lab and in the field to producers directly and answer their questions.

Attendees spotting cool names for experimental & released varieties: Stingray, Curiosity, Pirahna, Dynamic, Sockeye, Hulk, Sonic, Norwest Duet, Guardian, Whistler.

Inflation driving tax collections ever higher

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.

Higher education bills signed into law

Gov. Jay Inslee has signed a fleet of WSU-supported bills into law.

House Bill 1751, in part, requires anti-hazing training for new students and institutes new transparency requirements for institutions of higher education and social fraternity and sorority organizations for violations of hazing laws, codes of conduct, and other protocols. WSU issued a statement this afternoon hailing the bill’s passage, which can be found here.

House Bill 1835 in part establishes a marketing campaign to promote the Washington College Grant in an attempt to encourage more low-income students to pursue college post-secondary credentials. House Bill 1736 establishes a state-run low income student loan program.

Last week the governor signed House Bill 1622, directing the WSU College of Nursing to offer training for nurses seeking to become certified as Sexual Assault Nurse Examiners. WSU testified in support of the bill and plans to offer in-person simulation training in Spokane and Yakima.

Operating budget funds compensation increase, cybersecurity programming, pharmacy residency program

Leaders in the House and Senate this evening approved a supplemental operating budget agreement that funds a series of WSU priorities and sent it to the governor.

The two chambers’ compromise provides $7.5 million for compensation enhancements. It improved upon the formula used to fund such increases consisting of a mix of new appropriation and tuition revenue. Such funding splits most recently have been 53 percent new appropriation and 47 percent tuition. This year’s budget improves that ratio to 65 percent new appropriation and 35 percent tuition, recognizing the formula has been frustrated when new tuition revenues don’t materialize as total enrollment ebbs and flows.

The budget compromise also provides $2.1 million for WSU to establish a new academic degree in Cybersecurity Operations at the Pullman, Tri-Cities and Everett campuses. It will be offered by the Voiland College of Engineering and Architecture. A second cybersecurity proposal — a new Information Assurance major to Business Administration degree offered by the Carson College of Business — was not funded.

The compromise also provides funding for WSU to develop a one-year psychiatric and behavioral health residency program in Eastern Washington. The state’s $341,000 investment will allow WSU to develop a program with two residents a year providing care to patients in clinical settings, specifically in Eastern Washington where access to behavioral health services is limited. The advocacy effort was a cooperation with the University of Washington which will establish a similar program.

The budget also funds a series of other priorities involving WSU, including an array of assignments brought by legislators.

  • House Bill 1622 directs the WSU College of Nursing to provide training for nurses seeking to become certified as Sexual Assault Nurse Examiners. The budget provided $122,000 in annual funding to implement it.
  • The budget provides an additional $608,000 per year in core support for the Washington State Academy of Sciences, for which WSU is the fiscal agent.
  • Costs to implement apprenticeship and anti-hazing legislation are fully funded.
  • Funding for WSU research or work group assignments is provided for stormwater, an agricultural symbiosis initiative, community solar projects, energy code education, catalytic converter theft policy, and policy associated with towing vehicles used by homeless individuals as a residence.

The operating budget compromise now goes to the governor for his signature. Today is the final day of this year’s 2022 legislative session and adjournment is expected by midnight.

Capital budget compromise funds Holland Library shelving

The state Senate and House released their compromise capital budget this afternoon, providing $2 million to WSU for high-density compact shelving in Holland library on the Pullman campus.

The shelving would start a broader effort to consolidate some library collections and reclaim space in the campus core that could be repurposed at a later date. The reclaimed space could serve as a venue for new student study spaces.

The funding was previously proposed in the separate Senate and House capital budget proposals, in addition to the governor’s proposal which in December proposed $8 million for the effort. The compromise budget now awaits a vote by both chambers before it goes to the governor for consideration.

Legislative leaders said today that agreements on operating and transportation budgets will be revealed tomorrow in advance of floor votes in the House and Senate. The Legislature is scheduled to adjourn this year’s session Thursday night.

SANE nursing bill sent to governor

A bill that would direct the WSU College of Nursing to provide sexual assault nurse examiner training was voted out of the Senate last night with a unanimous 47-0 vote. House Bill 1622, sponsored by Rep. Gina Mosbrucker, cleared the House in late January with a unanimous 97-0 vote.

If signed by the governor and funded in the operating budget agreement now being negotiated, the College of Nursing would establish a training program to prepare nurses to become certified as sexual assault nurse examiners. The training would include online didactic instruction and on-site training providing enough simulation experience to qualify participants for SANE certification. This would enhance training availabilities in Eastern Washington with simulation programing located in Spokane in the first year and expanding to Yakima in the second year of implementation.

Last night’s floor debate can be viewed below.

Senate, House air operating budget proposals

Following an impressive economic and revenue forecast last week, state budget writers released their supplemental operating budgets for the 2021-23 biennium on Monday. Both the Senate and House proposals provide funding for WSU’s top legislative priority of employee compensation.

Like the governor’s budget, the House budget provides $7.32 million for compensation enhancements and the Senate budget provides $7.67 million.

The Senate’s proposal would provide WSU the requested $4.448 million in annual funding to establish two undergraduate degree programs focused on cybersecurity at the Pullman, Tri-Cities and Everett campuses. These programs, a Bachelor of Science degree in Cybersecurity Operations and an Information Assurance major within the Business Administration degree, would equip students with the tools needed to enhance the state’s cybersecurity workforce. While this was funded in the governor’s proposal, it was not funded in the House proposal.

The Senate and House operating budget proposals both provided the requested $341,000 for WSU to develop a one-year behavioral health residency program in Eastern Washington. The program would see two residents a year providing care to patients in clinical settings. This effort was brought to the Legislature in collaboration with the University of Washington.

Also released today was the House supplemental capital budget, which provided $2 million for WSU to begin to purchase high-density compact shelving units for collections in Holland Library on the Pullman campus. This would allow space to be reclaimed that could be renovated for other uses in the future. The Senate budget also provided $2 million for this, while the governor’s budget provided $8 million.

With all three operating budget proposals and all three capital budget proposals now released, budget writers will begin working on negotiating compromises  to send to the governor for his consideration.