Collaboration in Civic Spheres

New report: still 100K fewer jobs in WA now than in 2007

by John Stang June 21st, 2012

Washington has had three recessions since 1990, but the current recession’s recovery has been glacially slow compared to the last two. Roughly 150,000 jobs slower, based on each economic recovery after 50 months. The slight recession in 1990 ended after a few months, and Washington’s employment grew by almost 200,00 extra jobs by the 50-month point. Washington’s recession in 2001 lost about 60,000 jobs, all regained at the 40-month point. Ultimately, Washington had 50,000 more jobs at the 50-month point than it did when that recession began. The 2007 recession has proved much more persistent, as a state report released yesterday again confirmed. Washington had lost almost 200,000 jobs after 30 months, and was still 100,000 jobs in the red at the 50-month mark in May 2012. This was part of the picture painted Wednesday in an Olympia briefing by the Washington Economic and Revenue Forecast Council, which consists of Republican and Democrat legislative budget leaders, the state budget director, the state treasureer and a support staff of economists. The council released a meeting information packet including data on post-recession jobs recoveries in Washington, and their latest quarterly revenue predictions.

From 6/20/12 meeting packet, WA Economic and Revenue Review Forecast Council

The council’s June report mirrors a similar February report that predicted a very slow economic recovery and an accompanying slow growth in future state government revenue for Washington.

Revenue forecast sunnier, but uncertain
On the revenue forecasting front, the council’s figures indicate that the state can expect $156 million more in revenue for the 2011-2013 budet biennium than predicted four months ago in February and $197 million more than expected for 2013-2015. What all that means is that the state’s best guesses for its biennial operating budget of 2011-2013 – which ends June 30, 2013 – now project $30.7 billion in renveue to pay for $30.68 billion in expenses, with $289 million in reserves and carryovers from 2009-2011. In other words, the latest revenue estimates are slightly better than expected, but a year remains for yet-to-happen fluctuations in the current budget biennium. Meanwhile, it is too early to tell what all this means for the 2013-2015 budget biennium, the budget leaders said.

Courts could mandate another $1B in education spending
A unknown variable is the effect of the recent Washington Supreme Court ruling that the state is not meeting its constitutional duties to adequately pay for K-12 education. Detailed calculations and agreements have not been made on how much extra money will have to be spent on K-12 education, But the preliminary estimates are an additional $1 billion will be needed for 2013-2015, $2.5 billion for 2015-2017, and $3 billion for 2017-2019. No one has yet figured out how to raise that extra money. Gubernatorial candidates Rob McKenna and Jay Inslee are hoping for future revenue growth and for finding still-to-be-mapped-out fix-it measures elsewhere in the budget.

Lawmakers apprehensive
“I’m pessimistic … until we see sustained growth in the economy. So I’m extremely concerned, ” said Rep. Ed Orcuttt, R-Kalama and chairman of the economic forecast council. “I don’t think a billion dollars can be cut (from elsewhere in the budget ) to put into education (under the status quo),” said economic council member Sen. Ed Murrray, D- Seattle and the Senate Democrats’ head budget writer. He said a basic overhaul of the state tax structure – process likely to take years – is needed to improve the state’s revenue picture.

Meanwhile, the council’s staff’s quarterly report provided other snapshots of Washington’s slow recovery, including:

  • Fretting over Europe’s economic crisis, which has ripple effects on the United States and Washington “We still see Eureope as very much a risk factor to the (state’s economy,” said Steve Lerch, the interim director for the Economic and Revenue Forecast Council, essentially the state government’s chief economist. Murray said: “The great unknown is what is happening in Europe. That seems to have more of an impact than what we’re doing.” Meanwhile, the growth of China’s, India’s and South Korea’s Gross Domestic Products has slowed slightly from 2011 to 2012 — meaning they are less likely to buy exports from Washington, Lerch said.
  • June’s Washington’s nonfarm employment of slightly more than 2.85 million people is a little larger than predicted in February.
  • Boeing has more than seven years worth of back orders on its books – slightly more than 3,750 back orders for planes. Orders have drastically increased in the past three years – jumping from roughly 100 in 2009 to about 800 in 2011 and about 400 so far in 2012. Meanwhile, plane deliveries have hovered at slighlty more than 1,250 annually from 2009 to 2011.
  • Washington’s software employment dropped from 9 percent growth in 2008 to to a 4 percent drop in 2009. in 2011, The state’s software jobs clawed their way back to a 2 percent annual growth rate – a pace expected to remain stable for the next few years.
  • Construction employment is stating to climb, but needs roughly another 40,000 new jobs to meet a 2005 peak of about 200,000 state construction jobs. New housing permits are drastically below 2005 levels and are expected to stay that way until at least 2015.
  • State and local government jobs today are slightly below a 2009 peak of roughly 450,000.
  • Automobile sales are starting to climb again after a huge dip. But Lerch speculated that this recent increase is due to people needing to replace old cars rather than to any public optimism on the economy.
  • The typical Washington household’s average debt obligations have shrunk from 18.5 percent of its income in 2009 to 16 percent today – meaning people are paying off debts and being more careful in incurring new ones, Lerch said.
  • State sales tax receipts appear on target for about $575 million in 2012, compared to a 2007 peak of slightly mroe than $650 million in 2007.
  • The state’s business and occupation tax receipts shrank from roughly $240 million in 2008 to about $200 million in 2009, but have zoomed up to a prediction of more than $270 million this year. Rising gas prices contributed to this boost, Lerch said.

RELATED: In the first 13 minutes of video embedded below, State Reps. Ed Orcutt R-Kalama and Ross Hunter (D-Medina) discuss the state economic and revenue forecast council’s recent reports with host Sabrina Register on “The Impact,” a news discussion show broadcast by Washington State’s non-profit public affairs TV channel, TVW.


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