OLYMPIA — Washington’s revenues continued to improve over the past few months, but officials warned there is significant uncertainty moving forward as the state continues to struggle with a surge in coronavirus cases that has led to a new round of business closures.
Updated numbers by the Economic and Revenue Forecast Council released Wednesday show that projected revenue collections through mid-2023 are more than $900 million above what had been originally forecasted. But the state’s revenue projection for that same time frame remains nearly $2.4 billion below what it was before the pandemic hit.
That potential shortfall has steadily been shrinking since June, when numbers showed that state revenues through mid-2023 were projected to be nearly $9 billion lower than previous projections had shown. In September, they were projected to be $4.6 billion lower.
Revenues for the current budget cycle that ends mid-2021 are now projected to be $51 billion, with an ending balance of nearly $1.8 billion in reserves. And projected revenues for the next year budget cycle are projected to total more than $57 billion.
Steve Lerch, the chief economist and executive director of the council, said that the increase in revenues in September and October were driven in part by an increase in real estate taxes, due to record low mortgage rates and people seeking out new living spaces as they continue to work from home.
But the ongoing pandemic, which has led to record daily cases in Washington and other states, creates a lot of uncertainty, he said.
“The concern is that if cases continue to spike that there might be additional impacts on the economy,” he said. “Even without additional restrictions, people will pull back, they won’t feel comfortable shopping or doing other things. It’s difficult for us to know exactly the magnitude of those sort of changes.”
In recent days, the state has set a series of new daily cases of COVID-19, topping 2,000 a day. As of this week, there have been more than 134,000 confirmed cases and 2,571 deaths, according to the state Department of Health.
On Sunday, Inslee announced new restrictions on businesses and social gatherings for the next four weeks in light of the rising numbers. Those restrictions include the closure of fitness facilities and gyms, bowling centers and movie theaters and requiring restaurants and bars to be limited to to-go service and outdoor dining. Those restrictions come after businesses had started to regain activity as restrictions from the initial stay-at-home order issued in March were loosened in May.
The state’s unemployment rate jumped to from 5.1 percent in March to 15.4 percent t in April after businesses closed or reduced operations. The most recent rate for October was 6 percent.
Wednesday’s meeting was the final forecast before Gov. Jay Inslee releases a budget proposal next month ahead of the start of the 105-day legislative session in January. Budget leaders in the House and Senate will release their own proposals after the start of session.
