A new state tax-collections report showed Washington took in $9.4 million less in the past month than was forecast, and the states top economist said he is more pessimistic and recession risks are higher for the state and nation.
Arun Raha, executive director of the state Economic and Revenue Forecast Council, issued his monthly revenue report Thursday, and it presaged the likely sour news he will announce with his quarterly revenue forecast Sept. 15.
Gov. Chris Gregoire is bracing for grim news and announced Monday that state agencies must start looking for ways they can cut 5 percent or 10 percent of their budgets if it becomes necessary just months after a $5 billion budget gap was closed mostly through cuts in projected spending.
Our guarded optimism about the second half prospects of the national economy has given way to a sinking feeling of pessimism, Raha wrote. The national economic outlook has weakened significantly since our last forecast. The European economy is in no better shape as its sovereign debt problems have now spread beyond Greece to Italy and Spain.
To add to the mess, although Congress was able to lift the federal debt ceiling in time to avoid a default on U.S. bonds, it was not timely enough to prevent a debt rating downgrade by Standard & Poors . Bond, equity and commodity markets are now all pointing to a sharp economic slowdown ahead.
He added that consumer confidence is in the tank. The risk of the national economy slipping back into recession has increased significantly.
Rahas behind-the-scenes advice was a factor when Gregoire announced preparations for further cuts.
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