The state Revenue Forecast Council had some more bad news for Washington Gov. Chris Gregoire and the Legislature: The latest forecast is down another $122 million.

The governor already has called an emergency session of the Legislature, beginning Nov. 28, to begin the difficult task of dealing with a budget shortfall now in the $2 billion range, including a deficit now projected at $1.4 billion plus sufficient reserves to tap if the spiral continues.

Gregoire’s budget director, Marty Brown, said:

“Today’s forecast underscores the urgency of our budget situation. We have been working hard for months and are ready to go to work with the Legislature to find a balanced solution to our latest shortfall.”

The governor recently laid out a roadmap for possible spending cuts. She will release her formal budget plan next Monday.

The state budget is currently about $32 billion for the two-year fiscal period.

The forecast released by the bipartisan council on Thursday is the sixth bad one in a row, with the bottom line dropping a total of almost $5 billion over a relatively short period of time. Since September of 2008, when the Great Recession and collapse of global markets and institutions began, the forecasts have dropped by $7.6 billion.

Still, the council’s news release referred to the change as “minimal” in the context of the multibillion-dollar and the recent huge downturns.  Media accounts also were referring to a
“slight” downturn and budget blues getting a little worse.

Arun Raha, chief state economist and director of the council, said in his report that events are unfolding as expected in the September forecast, with some sectors of the economy doing very well, offset by a stagnant construction industry and government layoffs.  He said economic uncertainty still is quite remarkable — he gave a 40 percent possibility that his latest projection might turn out to be too rosy.

Raha said the biggest threats to recovery of the U.S. and Washington economy are debt problems in southern Europe and the continuing gridlock in Congress, developments that have caused “a steady erosion of both consumer and business confidence.”

Raha’s money quote:

“The main threats to Washington’s economy today lie well outside our region.”