Forecast council: There are “fewer bad things” left that could drive revenue down lower

After Raha’s presentation on the forecast (see blog post below), others on the panel have a chance to ask questions.

Rep. Ross Hunter asked how Raha arrived at the numbers.

“Right now, what’s holding us back is that we are basically facing a crisis of confidence,” Raha said. “Usually in a recovery this deep, you tend to also have pent-up demand, which is once people can go out and spend,” they buy the things they need plus all the things they need but haven’t bought. But, that’s not happening: Instead, consumers are mired in debt and reassessing what their needs are.

By law, the state has to prepare a pessimistic and optomistic forecast. Rep. Hunter said the last pessimistic forecast came true, and there’s “nothing else bad left to happen” — meaning it can’t get that much worse. Raha corrected: “There are fewer bad things that can happen.”

Similar to previous forecasts, Raha said this is a U-shaped recession: It dropped quickly, will bounce around the bottom for a bit, then will eventually recover. He said the question is just how wide the bottom of the U is.

The forecast voted to adopt the forecast.

Victor Moore from the Office of Financial Management, said the state will have to make up about $2.6 billion in the supplemental budget. “It’s getting to be kind of numbing to us,” he said.

A reporter asked if the Business and Occupation tax could be increased as part of a plan to address the revenue drop. “Absolutely not,” said Rep. Ed Orcutt.

Tags: Revenue forecast