State revenues keep ticking upward, and the latest monthly collections report by the Economic and Revenue Forecast Council says state coffers are now $115 million ahead of where forecasters predicted in late June.
The good news comes on the eve of Thursday’s quarterly forecast, which is expected to tighten the frame for how much Gov. Jay Inslee’s budget writers have to work with in 2015-17.
A report from Steve Lerch, executive leader of the council, said the monthly surplus above June’s forecast was about $25.8 million, or 2.2 percent above the last forecast. Cumulative collections are running 3.1 percent higher than forecast.
That boon is still small compared to the $1 billion to $3 billion shortfall assumed by Gov. Jay Inslee’s budget office, which assumes the state will be putting at least $1.5 billion of new funds into K-12 public schools next year to answer a state Supreme Court ruling that last week found the Legislature in contempt for its failure to do more to identify revenues. The Office of Financial Management explained in July in its budget outlook, “Barring an unforeseen dramatic rise in economic activity and revenue collections, we will face another sizable shortfall when we begin work on the 2015-17 budget.”
Compared to past post-recession periods, revenues are not recovering as quickly. A new report issued Monday by Standard and Poor’s drew a link between slower tax growth in states across the country and rising income inequality since 2000, but other factors include the rise of online sales that can avoid state sales taxes.
The state’s new revenue report also notes that Washington’s economy continues to add jobs, growing faster than anticipated just two months ago, and this lowered the state jobless rate to 5.6 percent in July, down from 6.1 percent in May and 5.8 percent in June.
Lerch said 17,900 jobs were added since the June forecast, or 4,800 more than predicted. Of those, about 13,000 were in the private services industries. Manufacturing added 1,600 including an unexpected gain of 900 positions in aerospace that Lerch expects to be reversed in the fall. Another 2,300 jobs were added in the construction sector, and governments at the state, local and federal levels added about 900.
Other economic indicators were mixed as car sales in August hit a new post-recession high and new vehicle registrations were highest since November 2007. At the same time, single-family home construction lagged behind expectations in the second quarter, while multifamily units exceeded forecasts and home prices in the Seattle area dipped in May for the first time since November 2011.
Nationally, the picture was generally positive despite the smallest monthly job gain of the year in August, which saw 142,000 added. But Lerch noted the figure could be revised upward, and past revisions to August data added 90,000 jobs on average during the past three years.