Economic recovery seems “like a mirage in the desert” and Washington’s economic forecast has been chopped by another $1.4 billion. Will there be a special session of the Legislature?

The grim news came at a meeting at the Capitol of the bipartisan Economic and Revenue Forecast Council.  House budget chief Ross Hunter said lawmakers now face the the prospect of slicing perhaps $2 billion out of a $30 billion budget that has been repeatedly “scrubbed” during the Great Recession. State budget Director Marty Brown said Gov. Chris Gregoire and the budget office will work closely with all four legislative caucuses to come up with yet another round of cuts.  The governor has ruled out across-the-board cuts, but has asked all agencies to come up with 5 percent and 10 percent cutback ideas.

Some lawmakers expect a special session before the regularly scheduled January session, and Sen. Joe Zarelli, the Senate Republicans’ budget leader, has suggested putting together a bipartisan House-Senate panel to devise a cutback plan.

In his report, chief economist Arun Raha said that in normal times, it would be hard to explain all the red ink in a state that has booming aerospace, manufacturing, agribusiness,  export and software sectors. Raha used the image of a mirage, with economic recovery always seeming close at hand, only to fade away as one gets near.

“Fear and uncertainty have overwhelmed consumer and business behavior. Political gridlock in the nation’s capital gives little hope that the full toolkit of policy options will be acted on….

“Every time our state has looked like it would break out of the malaise, it has been sucked right back in.”

Housing continues of “bump along the bottom,” and the job market is very weak, he noted.

The forecast for the rest of the biennium, ending in summer of 2013, is for $30.3 billion in revenue, down $1.4 billion from the June forecast.  The ending fund balance is down $1.275 billion in the red.