On Thursday the Economic and Revenue Forecast Council will issue our forecast for future revenue. This will cover both the current fiscal year (from now until June 30th) and the 2011-13 biennium. As has been widely reported we’re expecting bad news. My personal guess is that revenues will be down somewhere between $500 million and $1.5 billion, but probably closer to the former than the latter.
Gas prices are up and this impacts economic growth in significant ways. uncertainty about Middle East stability is probably more of a factor here. The Japan disaster is hard to figure – will there be fewer Toyota Prius’ available in Washington for people to buy, slowing car sales, or will we sell a lot of rebuilding supplies?
It’s been hard over the past couple of years to do accurate predictions, and ours have been overly optimistic. This has been painful, but it’s been worse in other states. The Pew center on the States recently released a comparison of state forecasts for 2009 (it takes a while for the data to get analyzed) and it turns out that we did OK.
The study by the Nelson A. Rockefeller Institute of Government and the Pew Center on the States, found that the median state over-forecast of revenues in 2009 was 10.2%. 70% of the states had more than a 5% over-forecast.
In contrast, ERFC records indicate that WA revenue forecasts in 2009 were an average 2.8% over-forecast.
So, we were over-optimistic, but not as much as a lot of other states. The study referenced above points to having a consensus forecast as a best practice, which we do – the Democrats and Republicans, or the Senators and Representatives can argue with each other about what we ought to do, but at least we all agree on the facts first.