The current Washington State recession could carve an $8.8 billion revenue shortfall out of state spending plans the next three years, budget officials said on Wednesday.
The sobering prediction came as the Economic Revenue Forecast Council reported that the COVID-19 pandemic was a major contributor toward state tax collections being 11.3% short of expectations so far this year. In the month ending June 10, the council reported that state tax payments from retailers were down 7.1% compared to the same time last year. The full update is here.
The state also said revenue could decline by $4.5 billion through the end of June 2021 and by $4.3 billion in the two-year budget that lawmakers will adopt next year.
The sagging results prompted new calls for Governor Jay Inslee to convene a special session of the state Legislature soon to address the financial crisis. Lawmakers are expected to consider a combination of spending cuts and new taxes to balance the budget.
In related developments:
- Employment Security reported that statewide unemployment had dipped in May to an historically high 15.5%.
- Inslee canceled many planned state employees’ raises and imposed furloughs on state workers to save money.
- Total non-farm statewide employment fell 417,600 jobs (seasonally adjusted) in the past five-month period.
- Former state House Speaker Frank Chopp, D-Seattle, has proposed a $2 billion revenue package that includes a capital gains tax on the sale of possessions such as stocks and bonds, and a corporate tax on individuals earning more than $500,000 a year.
Retailers have been winners and losers the past year as the economy has eroded, the forecast council reported.
- Sectors showing strong year-over-year growth were miscellaneous retailers (+79.2%), nonstore retailers (+27.9%), food and beverage stores (+26.7%), electronics and appliances (+8.1%) and building materials and garden supplies (+7.4%).
- Four retail sectors showed declines: apparel and accessories (-58.7%), furniture and home furnishings (-49.0%), sporting goods, toys, books and music (-26.8%) and gas stations and convenience stores (-11.6%).
- The seasonally adjusted number of new vehicle registrations fell 61.8% over the year in May.
Sources include ERFC, Bellingham Herald