By Jim Cline
The February “Economic and Revenue Update” from the Washington State Economic and Revenue Forecast Council provides a good summary of the recent rounds of good economic news both nationally and locally. The key findings by the Revenue Council include that on the national level:
- The U.S. labor market continued to expand, with 257,000 net new jobs added in January.
- Nationally, layoff announcements increased as lower oil prices hit the energy sector.
- U.S. real GDP growth was 2.6% in the fourth quarter and 2.4% for all of 2014.
- The Conference Board index of consumer confidence reached its highest level since January 2007.
As to the Washington State economy, the Council reports:
- Washington employment is slightly higher than forecasted due to stronger than expected job growth and upward revisions to historical estimates.
- Washington housing construction improved in the fourth quarter of 2014 and Seattle area home prices continue to rise.
- Washington exports reached an all-time high in the fourth quarter of 2014 thanks to aerospace and agriculture, but exports of other commodities declined over the year.
And as the Washington Legislature works on the next biennial budget, the Council reports an improved revenue picture:
- Major General Fund-State revenue collections for the January 11 – February 10, 2015 collection period were $53.8 million (3.8%) higher than the November forecast.
- Cumulatively, collections are now $69.0 million (1.5%) higher than forecasted.
- Last month, there were several large one-time assessment payments and re-funds that totaled $21.2 million. In addition, a $21.0 million refund that was forecasted for the month is now expected to occur in March instead. Had the refund occurred when forecasted, and the one-time payments not occurred, cumulative collections would have been $26.8 million (0.6%) higher than forecasted.
- Because the $21 million refund is still expected to occur, the effective cumulative surplus is $48.0 million (1.1%).
Despite the uptake in the State revenue, the state budget is under considerable strain due to standing demands, including State Supreme Court mandated K-12 funding enhancements. But the improved economy is contributing to a better balance sheet at the local government level which should contribute to a better bargaining climate for those negotiating with cities and counties this year.
