State economists see slight improvement in outlook

OLYMPIA — Washington economic forecasters said Wednesday they see a slight improvement in the state’s financial outlook, but the next governor will enter office next year staring at another shortfall.

Compared to past forecasts, state government is expected to bring in about $29 million more in the current biennium, according to the Economic and Revenue Forecast Council. That should mean that lawmakers won’t need to come back for a special session to balance the budget.

The next biennium that begins in July 2013 may be more problematic for political leaders. Finance officials expect that the state will have a roughly $500 million shortfall in that budget, with more needed as a buffer, and lawmakers are also looking to add some $1 billion in funding to education.

State economists also caution that there are several major risks that could hurt growth, such as a slowdown in China, debt in Europe and uncertainty in Congress.

“We have a lot of uncertainty,” said Steve Lerch, the new executive director for the forecast council.

Republicans and Democrats immediately began laying the groundwork for different approaches to the budget shortfall. Rep. Ed Orcutt, R-Kalama, said the state should be focused on raising revenues by growing the economy.

“The most important thing we can do is get people back to work,” Orcutt said. “It just naturally generates more money.”

That’s a sentiment shared by the state’s two candidates for governor — Republican Rob McKenna and Democrat Jay Inslee.

Sen. Ed Murray, D-Seattle, cautioned that while the state can continue to cut some programs, lawmakers likely wouldn’t cut more out of education and will want to protect other vital programs.

“To be really honest with the public … there are some places and some levels that members are not willing to go,” Murray said. He has suggested that the state consider new revenue as part of the solution.

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