Washington’s tax collections are up in the latest revenue forecast after a notable drop in the previous outlook.
After a half-billion dollar dive for the next two year budget in September’s forecast, the new predictions for the current 2021-2023 budget show an additional $762 million coming in and for the 2023-25 budget, an additional $681 million.
Republicans on the Economic and Revenue Forecast Council again argued that’s a sign it’s time for tax relief, but the forecast also shows high inflation, higher interest rates and slowing growth sticking with us for a while, so Democrats like State Senator Christine Rolfes say they’ll not only look at now but the long-term trends when they start to write that 23-25 budget. “The difference for us in this forecast is the rate of increase significantly slowing down,” Rolfes says, “As far as I can recall, that’s been the most dramatic trend in revenue growth that we’ve seen.”
The governor’s budget director also points out that as inflation pushes up collections for sales and the business and occupations taxes, it also pushes up the state’s costs, like recent news that costs for K-12 education are now up $1.5 billion, so they have to consider that when writing the budget. Office of Financial Management director, David Schumacher, says K-12 is about half the annual budget, so inflation causes big changes in those costs.
The state’s chief economist also says their predictions lean toward the pessimistic, so he expects revenue growth to slow considerably between the 21-23 budget period and the 23-25 cycle.
