Job growth in the state is slower than last year, but the unemployment rate remains low. (Sue Misao / Herald file)

Job growth in the state is slower than last year, but the unemployment rate remains low. (Sue Misao / Herald file)

No sign of recession for Washington, economists say

Exports dropped because of the Boeing 737 Max, but production is expected to increase early next year.

By Jim Camden / The Spokesman-Review

OLYMPIA — Washington may see a slowing economy in the next few years, but a recession does not appear to be on the horizon, the state’s economist told legislative leaders Wednesday.

“We certainly don’t see anything that says ‘Yes, a recession is coming,’ ” said Steve Lerch, executive director of the state Economic and Revenue Forecast Council.

Job growth is slower than last year, he said, but the unemployment rate remains low. Exports have dropped compared to last year because of problems with the Boeing 737 Max, but production is expected to increase early next year. Trade deals with China and European countries still haven’t been negotiated, which is a risk for a state heavily dependent on trade.

Tax collections jumped earlier this year because of increases approved by the Legislature. Revenue from property taxes, real estate excise taxes and marijuana taxes are all up.

All that adds up to a projected increase of $299 million in revenue for the 2019-21 general operating budget, which covers most state programs and salaries outside of transportation and construction. While that’s a relatively small increase in a total revenue estimate of some $51.7 billion, it is the starting point for planning and debate over any changes to that budget by Gov. Jay Inslee and the Legislature in the coming months.

The state’s transportation budget faces reductions as a result of Initiative 976, which voters approved to remove all taxes and fees for vehicle license tabs above $30. Because that’s a separate budget, Democrats downplayed any connection that would have on other state programs.

“I don’t anticipate a major impact from 976 to the general fund,” House Appropriations Chairman Timm Ormsby, D-Spokane said.

But Republicans have suggested redirecting some sales taxes collected from car and truck sales from the operating budget to transportation. Senate Ways and Means Committee Chairwoman Christine Rolfes, D-Bainbridge Island, said moving all of it could be more than $1 billion, which would cause reductions in all programs outside of public schools.

Sen. John Braun, the top Republican on the Ways and Means Committee, said transferring some of the sales tax money from vehicles “should be part of the discussion” because it has a logical connection to transportation projects. “Doing it all at once is probably not possible,” he added.

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