The hits just keep on coming. 

Washington’s bipartisan Revenue Forecast Council says the nose-diving economy will produce about $2.8 billion less revenue than predicted just a few short months ago.  Combined with the downturn that had been forecast in November, the gap now is in the neighborhood of $9 billion, the largest projected deficit the state has ever seen. The main state budget is $33 billion.

The new forecast is $553 milion lower than an interim report released last month, leading House Finance Chairman Ross Hunter to say “The problem just got a half-billion worse.”  

The Senate produces a draft budget next week and the House will soon follow with its own proposal. Governor Gregoire, using the November projections, proposed an all-cuts budget solution in December. Some majority Democrats are talking about submitting a tax package to voters as part of the solution, but everyone is expecting deep cuts, fund shifts, tuition hikes, wage freezes and less spending on citizen-mandated spending for education and other purposes.

Grim, grim days in Olympia — and for all the folks losing their jobs and businesses losing their shirts. 

The report says weakness in housing and auto sales now has expanded into other sectors, manufacturing, aerospace, software and retail sales. The recession bottoms out this fall and stays flat until picking up in the second half of 2010.  

For a look at the council’s news release, look here .