The Wall Street Journal today carries a story pegging of Delaware Gov. Jack Markell's efforts to get voters to understand the state's budget shortfall. It's a strategy many governors, including Gov. Gregoire, are using as they look ahead to years of structural deficits, exacerbated by steep and prolonged revenue declines. Does this sound familiar?
First, the reminder: If you haven't done so yet, take a look at the Washington Research Council analysis of Initiative 1033. The initiative caps growth in state revenues, returning revenue above the limit to property taxpayers. The WRC report shows how this works in practice.
As the election nears, the campaigns gets a little warmer.
TVW has video coverage of proponents and opponents debating debating Initiative 1033 before the Seattle Times editorial board. WRC groupies will particularly enjoy the segment running from 30:15 to 33:15.
The September forecast reduced combined general fund revenues for the 2007–09 and 2009–11 biennia by $238 million. For the broader near general fund, the reduction was $230 million.
Our brief on the forecast is available here.
Last Friday (September 11), the Forecast Council issued this month’s Economic and Revenue Update, reporting collection experience for the August 11 to September 10 period. This is the last key piece of information going into the next update to the state’s general fund revenue forecast.
State forecasters believe that the national economy has hit bottom, but expect the recovery to be tepid. It will be some time until it feels like the recession has ended.
The Research Council's analysis of Initiative 1033, which will be on the statewide ballot in November, has been posted here. The initiative would establish limits on the annual growth in revenue deposited in state, county and city general funds. Revenues above the limit would be rebated through property tax reductions.
The previous post discussed the recent upturn in the personal saving rate and the prospects that it will head even higher as the economy emerges from recession. In light of the recent increase in the saving rate, the following chart, which plots personal consumption expenditures as a share of gross domestic product, may seem anomalous.
Consumer spending is unlikely to lead the economy out of the current recession.