The state has updated its revenue forecast: The budget is down another $122 million for the 2011-2013 biennium. That means the $32 billion budget—after taking a $1.4 billion hit in the September revenue forecast—is now down to $30.19 billion. The total shortfall, in other words, is now $1.52 billion.

Gov. Chris Gregoire has already set the stage for the special session, which is scheduled to begin on November 28, with a proposal for $2 billion in cuts to deal with the revenue shortfall. Today's added hit only makes the budget task more treacherous.

The budget leaders in Olympia quickly issued statements on the latest numbers.

Senate Majority Leader Lisa Brown (D-3) and the Ways & Means Chair Ed Murray (D-43), issued a joint statement.

To families who are sending their children into more crowded classrooms, who are paying much more for their college classes, or who have seen the options for caring for an ill relative diminish, today’s forecast is no surprise. Their economic situation has not improved, and so neither has Washington state’s.

Through three years of the Great Recession, we’ve cut $10 billion in public services. Today’s forecast dropped another $122 million to take the total reduction in the forecast since June to over $2.2 billion. As legislators, we have a responsibility to balance the budget, and we will. But we also have a responsibility to our neighbors to help our communities recover and thrive.

The Democratic statement doesn't call for new revenue—something their caucus has been talking about.

I asked Democratic senate spokesman Adam Wilson if that meant they were backing off revenue options. "We haven't taken anything off the table." He added, though, that the caucus, which reportedly doesn't have the votes for revenue,  has "not moved closer to revenue."

Sen. Murray tells PubliCola he might no know if he has the votes for revenue in the Democratic caucus—something he and the leadership in both houses support—until around the holidays.

The minority party budget leader, state Sen. Joe Zarelli (R-18), issued a statement of his own.

I hear the calls for new revenue to rebalance the budget, and this forecast won’t change that. What I don’t hear, however, is anyone making the case that state government is being so efficient with the revenue already coming in that it simply can’t continue providing basic public services unless taxpayers dig deeper.

The goal should be to come out of the upcoming special session and regular session with an ‘all-priorities’ budget, meaning a dollar isn’t spent unless it’s tied to a priority of government. The best way to get there is by putting reforms before revenue – better yet, enact reforms before there is serious discussion about increasing revenue.

Zarelli's pitch to prioritize reform over revenue echoes an opinion piece he wrote for the Everett Herald earlier this week, but his statement today, when viewed beside that editorial, also reveals a quirk in the GOP's spin.

Today, Zarelli also said: "Our state has now gone four years without a positive revenue forecast. It will be a great day when that unhappy streak ends." This pessimism backs up his call for belt tightening.

But what about the other GOP line? Here's Zarelli in the Everett Herald : "It’s worth pointing out that the $30.5 billion revenue projection from September, while down from earlier in the year, will still be a record should it pan out. That equates to an anticipated revenue growth rate of around 7 percent for this budget cycle, an increase most Washington employers would be more than satisfied to see."

So, wait, is this positive revenue forecast or a negative revenue forecast? The Republicans seems to want to have it both ways. Government is expanding yet government is shrinking?

I asked Zarelli's office about this apparent contradiction—one that seems to say both that government can't afford certain programs anymore while simultaneously saying Democrats should stop whining about the need for new revenues because revenue is actually growing.

Zarelli spokesman Eric Campbell tells PubliCola:

No contradiction. When the revenue forecast finally flips back to positive, it will mean something good is happening (or is at least on the horizon) with the economy, the unemployment rate, etc., and you don’t have to go back into the budget you adopted just six months ago and make big adjustments. That will be a happy day.

I don’t think [Sen. Zarelli's] reference to the 7 percent rate is spun as a positive; it’s there to provide perspective and, perhaps, to frame a couple of unasked questions: 1) If the state is already collecting a record amount of revenue, how does the Legislature justify asking voters for more and 2) If an employer would be satisfied with 7 percent more revenue during these difficult economic times, can’t the Legislature?

The AP recently fact-checked the Republican claim that government revenue is on the rise and concluded otherwise. Indeed, state tax revenues for 2011 are  14 percent below pre-recession 2007 levels, after adjusting for inflation and population growth.