State Budget Continues To Be Bleak

The state’s budget hole got deeper Thursday, with a lowered revenue forecast that reflects a “fragile” economic recovery held back by slow job growth, sluggish construction and now the effects of Middle East unrest and the earthquake and tsunami disaster in Japan.

For the current 2009-2011 budget, revenue is expected to be $28.0 billion, which is $80 million less than the state’s previous projection in November, according to the Economic and Revenue Forecast Council.

And looking ahead to the next two-year budget, which lawmakers are grappling with now, revenues are expected to be $31.9 billion, which is $698 million less than the previous forecast.

And even this latest projection is uncertain because of what’s happening around the globe.

“First, we had the volatility in oil prices because of political unrest in the Middle East,” said Arun Raha, the state’s chief economist, in a statement accompanying the forecast. “Now we have the tragedy in Japan, the world’s third largest economy, and one of the state’s leading trade partners.

“The recovery continues to face other headwinds--slow job growth; a sluggish housing market; tight credit for small businesses; consumer retrenchment after the holidays; and fiscal drag from the federal stimulus winding down, as well as cuts in state and local government expenditures. Boeing’s tanker win will provide an important economic and psychological boost to the Washington state; however the recovery in Washington, as in the nation, is being held back by a weak housing market and sluggish job growth.”

Lawmakers will have to figure out where to make cuts as they deal with the lowered projections.

The legislative session is set to run through April 24, though there's some doubt it will wrap up in time.

Bonney Lake-Sumner Patch is working to get local officials' thoughts on the state's budget and how it will affect their own finances.

Click here for the full forecast.