On Tuesday, the Washington state Economic and Revenue Forecast Council released its June revenue forecast, which you can find here: http://www.erfc.wa.gov/forecast/documents/rev20130618color.pdf

It is a comprehensive view of the global, national and state economies and provides a snapshot of the state’s tax revenue collections.  Washington’s economy is recovering well in the areas that generate tax revenue.  Although aerospace and IT have been growing throughout the downturn, Washington’s economy is over dependent on construction, housing and real estate to drive tax collections.

The good news is that tax collections are above forecast for both the current fiscal period that ends on June 30 by $110 million and $121 million for the July 1, 2013 to June 30, 2015 biennium that lawmakers in Olympia are budgeting for now.

The other good news is that “caseloads” are down, which means fewer people are using government services like TANF, food stamps and other programs that are very costly.  This will save the state about $90 million for the next two years.

This financial windfall takes the wind out of the sails for any kind of tax increase or repeal of tax incentives for R&D that WTIA has been working to protect this whole legislative session.

The other upside is that the state’s colleges and universities will see a budget increase this year from the legislature.  There are still differences between House and Senate in the baseline budget and tuition policy.  The Senate is insisting on no tuition increases for the next two years while the House is budgeting for a 3-5% tuition increase. The Senate’s baseline budget is higher than the House’s, while the House version has more specificity for computer science and engineering.

It was a foregone conclusion that K-12 would get at least $1 billion in new money this biennium due to the McCleary decision that ruled the state was not fulfilling its “paramount duty” to provide a “basic” education to all students in the state. The issues were how to spend that new money.

House and Senate budget negotiators were working yesterday to resolve their differences, which will take some time to work through.  There are also differences in how non-mandatory K-12 funds are spent, with the House being more generous than the Senate in some STEM and career/tech education spending.

The bottom line is that the positive revenue forecast means the state legislature is likely to finish the state budget by the week of June 24 and avert a shut down of state government and avoid raising taxes while funding education adequately.