Less than 24 hours after Gov. Chris Gregoire signed a budget that fixed a $5 billion spending gap by cutting salaries and the budgets of nearly every state agency, a new revenue update brought more bad news.

A new projection of a $183 million downturn in the next two years, combined with the Legislature’s reliance on one-time fixes like a tax-amnesty windfall and fund grabs, leaves the state roughly $572 million lower than previously expected, state budget Director Marty Brown said.   The various moving numbers made for a murky presentation and the experts found it hard to explain how the Legislature’s presumed ending fund balance has now plunged so low.

Bottom line: the expected reserves have dwindled to less than $164 million out of a two-year budget of $32 billion.  Budget leaders said still more spending cuts may be required, if not an emergency session of the Legislature later this year.

Lawmakers and the administration, of course, hope the economy turns around and arrests the revenue freefall.  Arun Raha, the chief economist and director of the Economic and Revenue Forecast Council, said potential improvements in the Washington economy include Japan’s restoration and its reconstruction needs, lower oil prices and improvements in construction and home sales.

Governor Gregoire said the “grinding recession” continues to test the state and its people and businesses. She added:

“We continue to recover from this recession, but not at the rate projected.”

She said the state will redouble its effort to create jobs and help businesses and families get back on their feet.  One of the state’s real bright spots right now is international trade, she noted.  Gregoire leaves soon for a trade mission to Europe, including the Paris Air School. She said her goal is to “show the world that Washington has the best workers and companies and a competitive business environment.”