State Chief Economist: 2011-13 Revenue Forecast is $1.4 Billion Less Than Thought

The state of Washington is expected to bring in $1.4 billion less than what had been expected in tax dollars between this year and 2013, the state chief economist announced Thursday.

The baseline of tax dollars that has been forecast to enter the public coffers between 2011 and 2013 is $30.3 billion, state officials said. In comparison and as The Seattle Times reported, the state's two-year budget is $32 billion.

Just exactly how this drop, which is another sign of how challenging the recovery from the Great Recession remains, will affect Seattle-area governments or the school districts that serve Sammamish will play out will not be known until state lawmakers come up with line-item language of what stays and what goes.

But Arun Raha, the chief economist for the state's Economic and Revenue Forecast Council, struck a realistic tone in his statement:

We are in the fragile aftermath of the Great Recession where a return to normalcy seems like a mirage in the desert - the closer we get to it, the further it moves away. Fear and uncertainty have overwhelmed consumer and business behavior. Every time our state has looked like it would break out of the malaise, it has been sucked right back in. Political gridlock in the nation's capital gives little hope that the full toolkit of policy options will be acted on. In an increasingly interconnected world we are not immune to Europe's problems either. Downside risks outweigh upside risks.

In his full revenue forecast report, he noted those downside risks and upside potentials for the state and its residents.

Among the Downside Risks:

• Congress fails to produce and pass a deficit reduction plan that both the U.S. House of Representatives and the U.S. Senate can agree upon
• European countries experience "sovereign" debt default
• Gross domestic product numbers for the United States are forecast to dip, especially closer to 2013
• Rising wages in India and China create inflationary pressures

Upsides:

• Employers hire more workers, which starts a "virtuous" cycle
• The recovery is aided by pent-up demand

Word of the drop in tax dollars is not a complete surprise. On Sunday's "Up Front" public affairs program on KING-5, .

He even went so far as to encourage residents who have stable jobs and enough discretionary income to spend because a demand for goods and services helps the economy. While aerospace, software and agriculture remain strong areas in the state, he said construction is still hurting.

Leaders in the and  - which rely on state tax dollars to support students in the classroom - are well aware of the downward trend of fewer tax dollars.

At a recent board meeting of the Issaquah School District, elected representatives . They dubbed it a "clawback" - which is a dollar cut, one that could happen in the middle of an academic year.

For this academic year, both districts managed to avoid job cuts for teachers and reduced direct classroom services by dipping into reserve funds or levy dollars. But district officials have said this formula to fill in the state dollar shortfall cannot be done for the long term.

Lake Washington School District spokeswoman Kathryn Reith said Thursday that administrators will want to see how the governor and state lawmakers use the forecast numbers to draft budget legislation.

Sara Niegowski, Issaquah School District spokeswoman, said she would forward a response to the forecast once the budget staff has had a chance to analyze the numbers.