More bad economic news this morning. State tax revenues are expected to drop an additional $529 million below projections as the nation's deteriorating economy takes its toll in Washington. The new projected drop comes amid the recent turmoil on Wall Street and new speculation that Washington Mutual may be sold.

The state Senate Ways and Means Committee had previously predicted lawmakers will have to close a $2.7 billion budget shortfall when they meet in January to put together a new budget. This makes matters worse, with the projected shortfall now topping $3.2 billion. The current two-year general fund budget is $33.6 billion.

Officials say sagging consumer spending, particularly on cars, is a major factor. Slowing home sales and reduced construction employment also are part of the problem.

Some legislative budget writers are already predicting they'll have to use the state's constitutionally protected rainy day fund to help fill the hole. The state expects to have about $728 million in the rainy day fund.

It normally takes a three-fifths vote in both the House and Senate to use the rainy day fund. However, when state employment growth drops below 1 percent, it only takes a majority vote. The September forecast for employment growth for 2009 was 0.6 percent.