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Washington quarterly revenue projection down $552 million from February preliminary estimate

$2.9 billion decrease since November forecast

FOR IMMEDIATE RELEASE — March 19, 2009

OLYMPIA – The March revenue forecast for Washington state government shows projected General Fund revenue down a combined $552 million for the remainder of this biennium and the next two-year budget period, compared to the February preliminary estimate.

“Until our national banking and credit system is restored to good health, businesses and households lack the capital and confidence to jump-start our economy,” said Dr. Arun Raha, the state’s chief revenue forecaster. “However, the federal stimulus and other recent moves by the federal government to repair the banking system suggest the beginnings of an economic recovery by the end of the year, with improvement in the state revenues to follow.”

“The forecast signals that we will have to continue to make shared sacrifices in these tough economic times,” Gov. Chris Gregoire said. “Unfortunately, even with the billions of dollars heading our way from the federal recovery package, Washington still faces the largest budget gap in state history. We’re certainly getting much-needed help, but it’s not a cure-all.”

The governor began taking steps in August to address shrinking revenues by placing a freeze on hiring, out-of-state travel, equipment purchases and personal service contracts as well as ordering across-the-board spending reductions. Last month, Gregoire signed Senate Bill 5460, which mandates belt-tightening measures across state government, and House Bill 1694, which takes early action to reduce spending during the current fiscal year, which ends June 30.

“A Stanford economist once said a crisis is a terrible thing to waste. We can’t afford to ride out this economic crisis and wait for things to turn around,” Gregoire said. “My administration and the Legislature are doing what we can to help turn around our ailing economy. Business, labor, community groups and citizens must put aside politics and work together to get people back to work so that we find ourselves in an even stronger position exiting this recession than entering it.”

The governor recently took action to increase unemployment insurance benefits by $45 per week and to authorize the immediate spending of federal transportation stimulus funds for state projects. These actions will help pump millions of dollars into local economies.

Revenue for the current budget period, 2007–09, is projected to decrease $14.5 million compared to the February preliminary estimate, resulting in total projected revenue for the biennium of $27.89 billion. Revenue for the next budget period, 2009–11, is projected to decrease $538 million, resulting in projected total revenue of $27.95 billion.

The revised forecast creates a $480 million deficit in the General Fund for 2007–09. The Rainy Day Account proposed by Gregoire and passed by the voters in 2007 will contain about $430 million in constitutionally protected reserves.

“We are considering options to close the shortfall for the current budget period, including the use of the Rainy Day Account and additional federal recovery funds,” said Victor Moore, director of the state’s budget office.

Contact: Glenn Kuper, Office of Financial Management, 360-902-7607