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Friday, November 18, 2005
Forecast for state revenue jumps by $305 million
OLYMPIA -- Washington's hot economy, still surging with a mighty assist from construction and real estate sales, will boost state coffers by more than $300 million, forecasters said Thursday.
But in the same breath, economists warned of dark clouds on the horizon, and Gov. Christine Gregoire and key legislators cautioned against a spending spree in the coming legislative session.
"There's a lot of risk out there," state budget director Victor Moore said.
It's a tempting target: The revenue update, reflecting the fourth quarterly revenue surge in a row, brings the state's reserves to more than $1.4 billion.
Chief economist ChangMook Sohn's new analysis for the state Revenue Forecast Council presumes a cooling of the red-hot housing market and consumer spending, and it projects continuing high oil prices.
The housing bubble hasn't popped yet, but a cool-down probably is imminent, Sohn said.
In Washington, the real estate and construction sector are responsible for half the new $304.9 million windfall announced by the council. The state will collect another $100 million just from the tax on real estate transactions.
Gregoire, a Democrat, will use the forecast as she finishes the state budget she sends to the Legislature next month.
Moore said the plan will include more than $200 million for human-service caseloads, school enrollment and teacher raises, plus money for public pensions.
The administration will support at least $176 million in additional pension contributions, and the Legislature should sock away hundreds of millions toward the extra $700 million pension payment that will come due in two years, he said.
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