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WSU Government Relations Newsbeat

Forecast down $1.4 billion, ‘No end in sight’

The state anticipates $1.4 billion less in tax revenue through July 1, 2013, than previously thought, opening a new deficit close to $1.3 billion just months after the Legislature balanced the budget with widespread cuts.

That’s according to this report released this morning by the state’s Revenue and Forecast Council. It remains to be seen how the Legislature will react. If nothing else, the Council is scheduled to release its next forecast November 17. The governor will base her supplemental budget proposal on that report.

Much of the sharp downturn in revenue expectations is being driven by national and international forces, despite some positive developments in Washington’s aerospace and software industries and for Washington exports.

“We are in the fragile aftermath of the Great Recession where a return to normalcy seems like a mirage in the desert—the closer we get to it, the further it moves away,” the report reads.

Arun Raha, the state’s chief economist, left little room for optimism.

“I see no end in sight,” Raha said. “The best we can hope for is we don’t slip back into another recession.”

Commission releases redistricting proposals

The state’s bipartisan Redistricting Commission released a quartet of proposals – one from each of the Legislature’s four caucuses – this week as part of its once-a-decade efforts to redraw the state’s congressional and legislative district boundaries.

Lines are redrawn after every U.S. Census to ensure that each district is of roughly equal size to ensure appropriate representation in the Legislature and Congress. Due to above average population growth, Washington was awarded a 10th congressional district this year, adding some additional  complexity to this year’s redistricting efforts.

You can check out the proposal released by each caucus here and the Seattle Times’ writeup here.

The Commission must agree on a final  proposal by year’s end and  send it to the Legislature for final approval early next year.

Tax collections dip only slightly but dark clouds loom

The state’s Economic and Revenue Forecast Council reported today that tax collections for the past month came in just $9.5 million below expectations but hinted that a significant downturn in expected revenue is in the offing.

The Council is due to release its quarterly revenue forecast at 10 a.m. Thursday. It is thought that it could decrease expected revenue through the end of the brand new two-year budget cycle by as much as $2 billion. Though less than the $5 billion hole the Legislature just plugged, it would be a significant number because so many methods for balancing the budget – including tuition increases – already have been deployed for the biennium.

Total tax collections since the June forecast have been just $40 million below expectations. But an expected national slowdown in economic activity is drawing itself out and “estimates of national growth for the remainder of this year and the following year have been revised down sharply,” the Council wrote in its report.

“We do not, therefore, expect future revenues to come in close to the levels forecasted in June,” it wrote.

Higher education cuts among worst in nation

The American Association of Colleges and Universities has a new study out offering a sobering glimpse into how Washington stacks up nationwide when it comes to funding its four-year public universities.

Long story short, cuts to the state appropriation in Washington for fiscal year 2012 are the third deepest in the nation at 23 percent. And it’s getting some ink here, here and here.

So while it’s true that the national economic slump created a budget crisis in all but a few states, only Arizona and New Hampshire saw deeper cuts to their four-year public university systems.

Super Committee and debt negotiations

Just this morning, a public organizational meeting of the Super Committee took place marking the beginning of debt negotiations by this special committee.  The group is made up of 12 members from both Houses and is charged to produce a proposal to create $1.5 trillion in debt savings over the next 10 years.  See the Super Committee Overview and Updates from McBee Strategic for details on what we could expect to see from this group as they work towards the December 23rd deadline.

Co-Chaired by Senator Patty Murray, Washington is in a key position to engage in the process, and WSU is working with coalitions statewide around the institution’s pillars of excellence.

Forecast Council ‘increasingly pessimistic’ about economy

The state’s Revenue and Economic Forecast Council issued a new report Friday that only serves to fuel speculation the September 15th revenue forecast could dramatically reduce state revenues.

The quarterly economic review, found here, generally informs the revenue forecast which follows a week or two later. It is thought next week’s forecast could drop anticipated tax collections for the two-year budget cycle by much as $2 billion. State agencies, including state universities, already have been asked to model cuts of 5 percent to 10 percent.

In last week’s economic report, the council reported that it is “increasingly pessimistic about the outlook for the future” and that “the probability that this fragile recovery gives way to another recession has increased.” While Washington has added 6,800 new jobs in June and July, some 9,200 were previously projected.

The council has revised its job growth expectations downward into 2013.

As legislators mull a possible special session and new cuts, it’s important to note that a number of options are off the table because they’ve already been implemented in the underlying two-year budget. College tuition is among them as the Legislature already has assumed consecutive undergraduate increases of 16 percent for the current academic year and the next.

A closer look at the Puyallup Research and Extension Center

Last week we hosted Rep. Susan Fagan on a tour of the WSU Puyallup Research and Extension Center.

The experiment station is one of four research stations in the WSU system and is one of the oldest WSU facilities, having opened just two years after the main campus in the 1890s.

Today it’s home to world class research and extension programs and of late has become noted for research being conducted on stormwater, a significant issue in both Western and Eastern Washington.

In her latest e-newsletter, Rep. Fagan recounts her visit and you can check it out here.

Tax collections slip by $9 million

We’re a bit late in posting this – WSU’s government relations team just wrapped up a four-day, three campus tour for legislative and congressional staff – but state tax collection for the past month have fallen short of projections by $9 million.

It’s not a huge number. But add that to the shortfall witnessed a month ago and collections are down by $31 million since the most recent quarterly revenue forecast.

You can find the state Economic and Revenue Forecast Council’s revenue update here. And the Spokesman-Review had a good write-up here.

The bigger news is what implications this has for the next quarterly revenue forecast, due to be released Sept. 15. If it falls by a steep margin, talk of another special session and even more budget cuts can be expected.

Talk of more cuts, special session, starts anew

The new two-year budget cycle is barely a month old and already talk is turning to the prospect of a budget re-write and more cuts.

The state budget office on Monday instructed state agencies to identify cuts to achieve a 10 percent reduction should they be required by no later than January. You can read the Spokesman-Review’s write up of the development here and the Olympian’s report here.

The next quarterly revenue forecast comes Sept. 15. We should get a preview of where things stand late this week when the state’s Economic and  Revenue  Forecast Council reports actual tax collection numbers for the past month.

Update on Debt Ceiling

Voting is underway in Washington DC on the deal that was struck late last night on raising the debt ceiling.  McBee Strategic has provided this detailed analysis and below are a few more notable points to be aware of.

• President Obama reached an agreement with Congressional leaders last night on a multi-step deficit-reduction package expected to total $2.4 trillion over 10 years, to be accompanied by nearly matching increases to the debt limit.

• Last night’s agreement makes it almost certain the U.S. will not default this week. However, it’s not yet clear the U.S. can preserve its AAA credit-rating since $2.4 trillion falls well short of the $4 trillion standard cited by Standard & Poor’s.

• Spending cuts will be historic if not unprecedented, and the battle will continue likely throughout the 2012 election cycle; no tax increases; at least $2.1 trillion in debt ceiling headroom; requires defense to shoulder a large part of spending cuts.