If you see your lawmakers monitoring news in Europe, chances are it’s not for vacation planning but instead state budget planning.
According to the state’s economist Dr. Arun Raha, economic turmoil in Europe could play a huge role in our state budget debate. From today’s state revenue forecast:
“The main threats to Washington’s economy today lie well outside our region. It seems that for every step forward that Europe takes in resolving its financial mess it takes half a step backward, adding to global financial volatility and nervousness. The key for the U.S. and consequently Washington economies is whether the European policy authorities can be successful in containing a sovereign debt crisis in Southern Europe from turning into a full blown European banking crisis. The former would do some damage, but the latter would be devastating.”
The good news from today’s forecast was that despite the state’s projected revenue increase being reduced by $122 million, revenue is still projected to increase 7% over the previous budget.
That said there is a 40 percent chance that all that projected revenue increase could be wiped out depending on what happens in Europe as previously noted.
A year ago there was a 15% chance that revenues would come in around $30 billion. That is very close to the current forecast of $30.2 billion. According to Raha there is a 40% chance that revenues will come in at $28.2 billion. The state’s current budget is $31.7 billion.
Despite this economic uncertainty, state productivity is improving which means as lawmakers address the current budget deficit that need to do everything than can to not inhibit this growth and business’ capacity to further grow the economy.
Here are some ideas for structural budget reforms that the Washington Policy Center provided the Governor last month.
[Reprinted from the Washington Policy Center blog; photo credit: alles-schlumpf]
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