Economic and Revenue Forecast Council releases revenue forecast preview

On February 19, the Economic and Revenue Forecast Council released preliminary figures for the regularly scheduled March 19 forecast. This preliminary forecast is meant to provide the Legislature with early guidance regarding the impact of the deteriorating economic conditions.

The revenue forecast is estimated to be $2.3 billion lower than previously expected, making the budget deficit for the remainder of this biennium and the next biennium $8.3 billion. Layoffs from Boeing, Microsoft and Starbucks have added to an increasingly negative economy.

The preliminary forecast brought to light an additional loss of $721 million for the current biennium, which does not include caseload projections that will be released in March. This will require the Legislature and the Governor to address additional budget cuts for the current biennium (read about HB 1694 and SB 5460 below, which were signed by the Governor earlier in the week).

2007-09 state supplemental budget signed by Governor (HB 1694, SB 5460)

On February 18, the Governor signed SB 5460, what has been called the "belt-tightening" measure, and HB 1694, addressing fiscal matters for the 2007-2009 biennium.

This year’s supplemental budget moved through the Legislature earlier than normal in order to reduce spending during the current biennium (which ends June 30, 2009) to assist with balancing the next biennial budget. HB 1694 decreases spending by $635 million. These bills also put into law the hiring and spending freezes ordered by the Governor last summer.

Property tax and fiscal flexibility bills (SB 5432, SB 5433) – AWC Priority

In last week’s Bulletin, two AWC priority bills that would provide greater fiscal flexibility were reviewed.

SB 5432, adjusting the property tax levy lid limits for certain local services, would eliminate non-supplanting requirements for multi-year levy lid lifts, adjust certain property tax levies to the higher of 101% or inflation (including EMS levies), and eliminate the 60% vote requirement for EMS levies. This bill was heard in the Senate Ways & Means Committee on February 18.

SB 5433, modifying provisions of local options taxes, would also remove non-supplanting requirements from the 0.3% sales tax and multi-year lid lifts. This bill was heard in the Senate Government Operations & Elections Committee on February 16 and executive action taken on February 19.

Changes affecting the city-county assistance account (HB 1667/SB 5511) – AWC Priority

These bills would make changes to the distribution formula of the city-county assistance account, as well as the calendar year by which distributions are made (see last week’s Bulletin for more information). While SB 5511 is in the Rules Committee awaiting action by the full Senate, HB 1667 is scheduled for executive session in the House Finance Committee on Thursday, February 24.

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