1. Washington’s Current Economic and Revenue Conditions Dr. Chang Mook Sohn October 3, 2002

2. Summary of Changes to the General Fund-State Cash Forecast Comparison of the September 2002 and the June 2002 Forecasts (Millions of Dollars)

3. September 2002 Alternative Forecasts 2003-05 Biennium Cash Basis (Millions of Dollars)

4. General Fund-State Biennial Growth September 2002 Forecast

5. Comparison of Biennial Elasticity Taxable Sales (adjusted)

6. Track Record of Revenue Forecast Forecast reductions began in March 2001 Cumulative decrease of $300M before 9/11 Total of decreases since March: $1.2 billion June’s non-legislative increase due to actuals Data and national outlook have changed since June

7. Revenue Situations of Three Biennia

8. Revenue Comparison Across Western States-FY 2001-02

9. Employment Growth During the 2001-02 Recession

10. Aircraft and Parts Employment Trend

11. Prepackaged Software Employment Trend

12. Housing Bubble? Annual Change in Total Washington Real Estate Excise Tax Collections

13. Housing Bubble? Annual Change in King County Real Estate Excise Tax Collections

14. Investment/Telecoms Foreign Trade State and Local Govt Spending Profits/Stock Market Employment? Early, deep rate cuts Fed Govt; Size and timing of spending and tax cuts Inventories/Manufact. Computer Demand? US Recovery: Past Comparisons Housing Consumer/Autos UNFAVORABLEFAVORABLE NO CYCLE

15. Risks to Forecast Terrorism Geopolitical uncertainty Oil price spike An unruly drop in the dollar The return of federal deficits could push long-term rates higher Stock Market Reaction Housing bubble?