Thursday, Jun. 19, 2008

Live blog: State revenues fall again

Just a heads up that the state’s Revenue Forecast Council issues a new revenue forecast at 10 this morning and I’ll be there to live blog the event, reporting just what the anticipated budget deficit will be going into the next two-year budget cycle.

We’ve already been hit with pre-emptive spin. Sen. Joe Zarelli, R-Ridgefield, is proposing new limits on hiring staff, consultant contracts, equipment and travel.

And Senate Democrats have issued a missive that predicts the state’s projected reserve accounts will drop to near $600 million today and arguing “the Rainy Day Fund was created for just this situation.”

If Democratic lawmakers argue that today you can bet it’ll play in every story before the jump if not make the headline.

Moreover, their note also makes the “projections are just projections” argument we’ve heard from them and the governor repeatedly.

But enough of what they said yesterday. We’ll begin posting updates to the bottom of this post at about 10. I invite you to check back for that. Both of you.

9:55 UPDATE: So I'm all set up here in House Hearing Room B and a few folks are starting to trickle in. Just a heads up that the actual report should be posted here by 10 or so.

10:02 UPDATE: It looks like the new revenue forecast has erased $60.5 million from the current two-year budget's ending fund balance and $163.4 million from the next two-year budget. So it appears to me to be a loss of more than $220 million that is no longer available for the next two-year budget. But we're about to get started here and hear more.

10:14 UPDATE: It looks like the official figure is a $167 million decline, which is a tiny drop on a percentage basis. But that's still big money if you're talking about adding or cutting programs. Some of the $220 million I mentioned earlier already has been assumed.

10:25 UPDATE: A pretty broad based economic slowdown is being blamed. Sales and business taxes are down and real estate excise tax collections continue to plummet.

"We are forecasting what would essentially be the worst downturn in 25 years," said Steve Lerch, the state's interim chief economist. "We do think this is a pretty dramatic decline in the real estate sector."

10:33 UPDATE: It should be noted that this is the third straight revenue forecast in which the forecast has gone down. That follows what had been a pretty good run. The ups and downs have generally followed the real estate market.

10:35 UPDATE: Lerch says it appears federal stimulus checks appear to have had some positive effect on retail sales and that those figures might have been worse without them, though data is somewhat sketchy.

10:44 UPDATE: Lerch predicts Washington will avoid a recession and notes that employment continues to grow "but it's pretty weak." He said the housing market should begin to pick up late this year.

10: 47 UPDATE: There's some small dispute over what the size of the state's projected budget deficit is. There are several more revenue forecasts and caseload forecasts to go before anyone has to write a budget, so the numbers are moving. Republicans are still using a $2.5 billion figure and argue that while this may be a small change it reinforces the direction the state is heading — toward a deficit.

"I think it's becoming more and more real," Zarelli said.

State budget director Victor Moore said agencies already have been asked to curtail spending on travel and other priorities where they can.

"We know there's going to be some pretty significant belt tightening we're going to have to do," he said.

11:04 UPDATE: They've just wrapped up. One thing to note is that Moore was asked about how he'd seek to plug whatever budget hole the state may be faced with later this year. The governor is required to produce a current law budget without new revenue sources (taxes). But she can also produce a second proposal that includes new taxes if she likes. But Moore said there are no plans to do so.

"I've been given no direction to put together a tax package for the governor," Moore said.

11:19 UPDATE: As a sidenote it's worth mentioning that Tim Eyman was having a press event at the Secretary of State's office at 11 to turn in some, but not all, of his signatures for his initiative. But since the revenue forecast went long all the reporters were either going to be late or miss the event completely.

No worries. Eyman always makes the rounds of our offices if we don't show up to his events, or even if we do.

In other news, my car really needs an oil change.

11:40 UPDATE: As could be predicted, someone used the comment section to point out a spelling error. FYI... If that kind of thing is your bag, then I'd encourage you to tune in every time I try and live blog any event. It's quite the juggling act that consists of writing the blog, scribbling notes on my notepad and shooting, uploading and posting a photo with cutline simultaneously. There's no time for editing.

But thanks for the catch, fair reader. I've fixed the error (and another you did not catch).

UPDATE: I'm just now looking at the letter to state agencies that Moore referenced earlier and realize I on some level misunderstood the motives behind it. The letter, dated May 29, is in response to high gas prices and encourages agencies to find ways to reduce fuel costs. It is not in response other budget pressures that we've been talking about today.

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