The November revenue forecast was lower again, driven by continued slow real estate transactions and lower than expected sales and B&O tax collections. The Economic and Revenue Forecast Council (ERFC) forecast showed that revenues will be $89 million less than September for the 2023-25 biennium and $181 million lower than predicted for the upcoming 2025-27 biennium.
With an expected $10-12 billion structural gap over the next four years between operating expenses for current service levels and reduced revenues, requests to increase school funding by $3 billion, and pressure from transportation project costs, it sets the stage for tough decisions in the Governor’s proposed budget expected the week of December 16 and legislative decisions in the 2025 session. To help reduce costs, the Governor imposed a freeze on state agency hiring, services contracts, goods and equipment purchases, and travel on December 2.
State law requires the Governor to submit a budget without assuming new revenues by December 20. That becomes the starting point for House and Senate discussions on their budget proposals, which typically are released in March following the first quarter revenue forecast and passed as one of the last bills of the session before adjourning at the end of April.
The forecast estimates do predict some future increased growth due to slowing inflation and predictions of lower interest rates. But lower than expected sales and B&O tax collections, the temporary impacts of the Boeing strike, and continued slow real estate transactions drove the lower forecast. Slower real estate transactions will also continue to impact city funding due to reduced real estate excise tax collections, which fund programs for cities like the Public Works Assistance Account and city-county assistance funding, and lower than expected document recording fees that fund local homelessness programs.
The transportation revenue forecast also showed a slowdown in gas tax revenues placing pressure on funding for current projects. More information on that forecast is available here.
AWC’s budget priorities were sent to budget leaders earlier this fall. We encourage you to discuss them when you meet with your legislators.
Revenue forecast relatively flat again
October 14, 2024
The September revenue forecast is $49 million lower for the current biennium as the state prepares the 2025-27 biennial Governor’s proposed budget for release in December. The estimates recognize future increased growth due to slowing inflation, but continued risks from international conflicts, the Boeing strike, and delays in federal action to lower interest rates.
The forecast does not include potential state revenue impacts of ballot measures proposed for the November election.