OPINION-EDITORIAL: The Economic and Revenue Forecast Council: An essential component of the state’s budgeting process
There are certain days during the legislative session familiar to nearly every lawmaker. Some are fun days, like “Dairy Day” when Washington State Dairy Princesses serve ice cream at the Capitol. Or when the Washington Cattlemen’s Association hands out barbecued beef sandwiches on “Beef Day.”
One of the most important days is when the quarterly revenue forecast is released by the state’s Economic and Revenue Forecast Council (ERFC). To budget your spending appropriately, you need to know how much money is expected to come in so you can plan out long-term payment of your bills. This is essentially what ERFC does for the state.
The council was created by statute (RCW 82.33.010) in 1984 to produce economic and revenue forecasts for the state. ERFC consists of two members appointed by the governor, the state treasurer, and four members of each caucus of the Legislature. I serve on the council as representative for the House Republicans. A chief economist and executive director leads the small agency under the authority of the voting council members.
Four times each year, the director releases an official economic and revenue forecast, and unofficial forecasts based on optimistic and pessimistic projections. The process is based on a variety of complicated economic state, national and international data, including employment statistics and projections. The forecasts are announced on or before Nov. 20 and Feb. 20 in even-numbered years, and on or before March 20, June 20 and Sept. 20 in odd-numbered years.
Last Thursday was the March revenue forecast release. It showed an increase of $247 million for the 2015-17 budget cycle and $303 million for the 2017-19 budget cycle. This increase is good news because it helps to reduce the pressure for tax hikes.
Budget writers from all four caucuses, House and Senate, Republican and Democrat, have waited for this day so they could plug information from the forecasted revenues into their spending proposals. These new figures will help to put us on track toward negotiating a final compromise two-year operating budget proposal.
ERFC is also charged with providing a six-year budget outlook to help the Legislature develop a long-term budget plan. This isn’t always easy, and sometimes we don’t agree about what to include and not to include in the six-year outlook. For example, in November, council members voted to adopt a motion that would show additional K-12 education (state Supreme Court McCleary) costs in the state’s six-year budget outlook, including as much as $3.5 billion per biennium. Sen. John Braun and I opposed the motion. We felt it was premature to book those costs into the budget outlook when the Legislature has yet to make policy changes that could be different than Forecast Council projections. The council, against our wishes, decided to add a footnote in the outlook to show those costs as “estimates.”
Why is this important? Even a footnote about estimated expenses could make the long-term outlook seem worse than it actually is, clearing the way for some lawmakers to argue for tax increases.
Accurate, accountable budgeting relies on careful planning. That’s why the decisions we make on ERFC are so important. It’s an essential component of our entire state budgeting process. As I take those votes on the council, and as a member of the House Appropriations and Finance committees, I keep in mind the money we book in the budget was first earned by you, the taxpayer. That’s why it’s critical we get it right.
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Editor’s note: Rep. Terry Nealey, R-Dayton, serves on the Washington State Economic and Revenue Forecast Council. He is also ranking Republican on the House Finance Committee and a member of the House Appropriations Committee.