A new Washington revenue forecast was what passes for good news at the beleaguered state Capitol: at least things didn’t get worse.

Lawmakers and the new governor still have a potential budget gap of several billion dollars, including court-mandated K-12 funding.

Some old Olympia hands had expected a sizable new drop in expected revenue for the next 27 months, perhaps in the $200 million range, but the number from chief economist Steve Lerch was up $40 million. The forecast for the remaining few months of the fiscal year is a net increase of $59 million and for the upcoming two-year fiscal period, down $19 million.

“Flat is the new up!” joked the Forecast Council chairman, House Appropriations Committee Chairman Ross Hunter.

State budget Director David Schumacher said the new budget gap number is about $1.3 billion. That includes a recently disclosed Medicaid shortfall of about $300 million and the $160 million impact of a court ruling on the estate tax.  Lawmakers also are under state Supreme Court directive to fully fund basic education; Hunter pegged that at $1.4 billion, but lesser sums also have been mentioned.  Many Republicans insist it’s possible to write the full budget without higher taxes.

The forecast does not anticipate a permanent sequester of federal funds, nor does it presume income from marijuana or from extending taxes that are scheduled to expire.

The new forecast, unanimously adopted by a bipartisan panel of legislative budget leaders and the state budget and revenue directors, reflects what Lerch called “fairly slow economic growth … and still lots of uncertainty out there.”  He said the construction industry is rebounding and that other sectors are regaining strength, but that employment and personal income growth remain tepid.

The current biennial General Fund revenue will grow 8.2 percent over last biennium and the 2013-15 revenue by 6.6 percent (about $33 billion).

Panel members, gloomy at forecast updates during the Great Recession, were fairly upbeat on the first day of spring.  Senate budget Chairman Andy Hill said the Senate coalition (23 Republicans and two Democrats) still have a goal of producing a budget plan that prioritizes education, without relying on new or extended taxes.  Hunter said he’s been saying for months that it would be very hard to balance the budget, including K-12 enhancement, without boosting revenue.

Hill said the Senate plan will be rolled out in five to 10 days.  Sen. Jim Hargrove, D-Hoquiam, said additional Democratic supporters may come on board.  Hunter said the House version will be available shortly after the Senate’s.  Schumacher said Gov. Jay Inslee will roll out his priorities by the end of next week, including K-12 and how to pay for it.  He said the governor doesn’t plan a full budget rewrite, but that it will be balanced.