Yesterday, Kriss wrote about the February revenue forecast, which estimates that—compared to the Nov. 2021 forecast—revenues in funds subject to the outlook (NGFO) will increase by $1.453 billion in 2021–23 and $1.320 billion in 2023–25. Revenues are expected to continue to grow going forward, though at a slower rate than we’ve experienced coming out of the Great Recession. Indeed, inflation is expected to outpace revenue growth in FY 2023, so real (adjusted for inflation) revenues are estimated to drop by 1.7% that year. However, real revenues for the 2021–23 biennium are still expected to increase by 7.9% over 2019–21. Real revenues for 2023–25 are expected to increase by 1.4%.

The charts below show how the forecasts for 2019–21, 2021–23, and 2023–25 have changed over time. (The Feb. 2020 forecast was the pre-pandemic baseline, the June 2020 forecast reflected the recession, and the March 2021 forecast is what the current budget was based on.)

Under the current forecast, for the period of 2019–21 through 2023–25, NGFO revenues are estimated to be $11.336 billion higher than in the March 2021 forecast. Note, though, that that figure includes legislative changes made by the Legislature last year (including the capital gains tax). Removing those legislative changes from the revenue increase, the state now has $10.129 billion more than expected at the end of last session.

Before the revenue forecast, we estimated that the state had a NGFO surplus of $11.249 billion. With the estimated increases in revenue, I estimate that the surplus is now about $14 billion over the four-year outlook period. That does not include $1 billion in the Washington rescue plan transition account, $1.2 billion in the rainy day fund, or $1.3 billion in remaining federal COVID relief money.