The Economic and Revenue Forecast Council just sliced $132.4 million from its revenue estimate for the combined 2005-2007 and 2007-2009 biennia. That's a pretty big slice and appears largely because it raises the question: Is this the turn? After several years of upward adjustments in revenues, largely fueled by real estate and construction, the downturn is both expected and disturbing.
...the value of transactions subject to the real estate excise tax has dropped more precipitously than expected in September.
The decline in the forecast for the real estate excise tax accounts for nearly all the overall forecast revision.
Dr. ChangMook Sohn, the state's chief economist and forecaster, still seems more optimistic than the Council of Economic Advisers.
An alternative forecast based on the average view of the Governor's Council of Economic Advisors yielded $243 million (0.8 percent) less revenue in the 2007-09 biennium than did the baseline forecast.
Earlier this week, Sohn reported revenue collections were below forecast, foreshadowing today's announcement.
Cumulative, for the two months since the September forecast GFS collections are $18.4 million (-0.8 percent) below the forecast. The cumulative shortfall is understated, however, due to three unusually large audit payments received last month. Excluding these special factors, the cumulative variance is $61.2 million (2.7 percent) below the September forecast.
The governor will base her supplemental budget recommendations on the November forecast. Although there's still a substantial reserve (numbered page 9), today's turn reinforces the need to restrain spending. The next forecast will come out in February.
MORE Let's try another survey. What do you think? (And don't forget this poll.)
