The Economic and Revenue Forecast Council met yesterday and adopted revised forecasts of general fund revenues for the current (2009–11) and upcoming (2011–13) biennia. For 2009–11, the new forecast is $28,127 million, a decrease of $385 million from the September forecast. Of this decrease, $64 million is due to the passage of Initiative 1107, which rolled back legislatively imposed tax hikes on bottled water, soda pop, candy and certain food products. For 2011–13, the new forecast is $32,605 million, a decrease of $809 million from the September forecast. Of this decrease, $218 is due to I-1107.

With the combined $1.2 billion reduction in forecast revenues, the budget gap through the end of 2011–13 is now about $5.7 billion, $0.9 billion of which is in the current biennium.

The ERFC press release is available here. A video of the EFRC meeting is available here. Slides from the meeting are here.

I noted in my post on the November collections report that while collections for the last two months combined were $20.8 million above the September forecast, the positive “varience” is entirely accounted for by early payment of property taxes and greater than forecasted transfers of unclamed property to the general fund.  Economically sensitive Revenue Act taxes (sales tax, use tax, B&O tax etc.) were $9.7 million below forecast for the two-month period. Arun Raha, EFRC Executive Director and Chief Economist, has concluded from this shortfall in Revenue Act taxes that the September forecast assumed too high a growth rate in taxes over the near term. The new forecast modestly reduces the growth rates through the end of the current biennium. These modest rate reductions compound to create the surprisingly large reduction for the 2009-11 biennium as a whole.