The final revenue forecast of the year shows little change from the September report by the Economic and Revenue Forecast Council.
The state is still on track to collect about $30.5 billion in revenue in the current two-year budget cycle, up a modest $8 million from September’s forecast.
Looking ahead, the state can expect a $900 billion dollar budget shortfall through 2015. The deficit is predicted to grow to $1.1 billion looking out to mid-2017.
Those numbers don’t include the state’s obligation to fully fund basic education, as outlined by the McCleary Supreme Court case. Many estimates have put that funding cost around $1 billion, but budget chairman Rep. Ross Hunter said an education committee has predicted it’ll actually be closer to $1.9 billion.
The state will also need to have cash on hand for a rainy day fund, Hunter said.
“So you actually have a $3.5 billion problem,” Hunter said. “Let’s make sure we really understand what we’ve got here.”
Gov. Chris Gregoire is currently preparing the 2013–15 budget, which will serve as the framework for Gov.-elect Jay Inslee’s administration. She warned in a statement that cuts alone won’t be enough to close the gap, and has previously said a tax hike will be necessary.
“We have a shortfall even before we begin trying to address McCleary,” Gregoire said. “I’ve instructed state agencies and my fiscal staff to scrub the budget for every possible savings. But, as I’ve been saying for months, it will not be possible to solve this problem entirely with spending cuts.”
The forecast doesn’t account for additional revenue from the state’s new marijuana legalization law because of the “uncertainty” that it poses, said chief economist Stephen Lerch.
The state Official of Financial Management has predicted that legal marijuana could generate more than a half billion dollars in new tax revenue annually. Lerch said he hopes the state will know by March whether or not the federal government will block the law.
Watch the full meeting below: