For an agency like Metro that has been forced to largely fund itself by sales tax the recent State revenue forecast revision could have significant ramifications. About half of the State’s revenue comes from sales tax so an increase in state revenue generally means an increase in sales tax revenue. With that in mind I contacted the County inquiring about their projections and Metro’s shortfall. Here’s David Reich, King County’s chief economist:
The county has its own models for forecasting revenues. Transit gets revenue from various sources including bus fares, sales tax receipts, property taxes, the congestion relief charge, intergovernmental transfers and others. Any impacts to metro’s financial situation would depend on the sum of all these factors (along with updated expenditures). We do forecast metro sales and property taxes in March, July and August.
It is too soon to know if these values will be revised up for the July forecast. Generally speaking, economic conditions are not worse than when the March forecast was done. The July forecast should be available July 24.
STB will check back at the end of July but in the mean time I have done some VERY ROUGH back of the envelope number crunching. Digging into the State’s numbers (pages 27 and 28), the Economic and Revenue Forecast Council projects the Department of Revenue will collect an additional $112.8 million this biennium. For the 2013-2015 biennium the State projection increased $101.2 million. Since sales tax is half of state revenue I cut those numbers in half. Using Martin’s estimate that Metro’s sales tax revenue is about 5.6%* of the state total, that would amount to $3.2m extra this biennium and $2.8m** extra for the 2013-2015 one, so $6m total additional sales tax revenue for Metro.
With Metro’s total 2015 budget gap at $60m that would come out to about 10% of the shortfall. So a little less bone and muscle cutting and if a tax package does pass it’d be a little more new service and less back-filling old service.
Now, it could be that the factors that caused the State to revise their forecast upwards were already incorporated into the County’s March estimate, so there will be no change. On the other hand it could be that since Seattle and King County are leading the economic recovery our tax receipts will grow faster than the State’s. There are really too many factors involved for anything but the clumsiest of estimates. I look forward to seeing the real numbers next month.
** The State projections show a ‘non economic changes’ debit of $55 in the 2013-2015 biennium. If this debit doesn’t effect Metro’s revenue then that comes out to an additional $1.5m for that period, for a total of $7.5m. Or about 12.5% of the $60m shortfall.