International instability expected to increase state budget woes
April 6, 2011
Washington state’s budget shortfall just got worse.
The state’s Economic and Revenue Forecast Council released its latest revenue forecast March 17, projecting a further revenue decrease of $698 million for the 2011-2013 budget.
State officials now project the budget shortfall for those years could reach about $5.1 billion if current services are maintained, if future promises are met, and wage and benefit increases are paid.
Washington’s chief economist, Arun Raha, said geopolitical uncertainties around the world are to blame for the decline.
With all the instability in the Middle East, oil prices have been driven up. That rise has been temporarily offset by the disaster in Japan, which greatly decreased demand for oil from one of the world’s largest petroleum consumers.
However, Japan is also one of Washington’s largest trade partners, and demand is down for almost all goods, not just oil.
“It is a fluid and fast-changing situation. The preliminary economic forecast, presented less than two weeks ago, is already outdated,” the Economic and Revenue Forecast Council said in its release.
The decrease in revenue will also affect the current two-year budget, which ends this year. The council predicts that the state will have nearly $80 million less than forecast in November.