By Mike Lindblom - Seattle Times staff reporter

King County's budget director Tuesday was the bearer of what now passes for good news.

Bob Cowan told Metropolitan King County Council members that the budget shortage for next year, in the general fund that supports police, courts, health and social services, has gotten only $10 million worse than forecast last fall.

It turns out, the county was clairvoyant enough last November to read the national clues of doom and predict a $39 million gap for 2010. About $695 million is needed to maintain existing service levels, but Cowan now predicts the county will be $40 million to $50 million short.

"We think that is fairly positive news — not that I want to portray a $50 million deficit as positive news, but it could have been a lot worse."

Over the winter, the recession has dragged Washington state's unemployment rate to 8.4 percent in February.

Meanwhile, several county costs are going up, including wages. Employees already have been ordered to take some unpaid furloughs, as a cost-cutting move.

Just what will be cut next year remains unknown, subject to a budget process that starts in September, Cowan said.

The general-fund budget relies on property and sales taxes. The latter are expected to dip 5.1 to 5.3 percent this year — but that's more optimistic than well-known regional economist Dick Conway's estimate of 6.5 percent statewide.

Cowan said he thinks King County will pull out of the recession sooner than other counties, because it is the "financial center" of the state and because big companies such as Boeing and Microsoft have gotten their layoff announcements out of the way already.

A real-estate excise tax, earmarked for park improvements and trails, has tanked by two-thirds in the past three years, Cowan said, and is forecast to bring in just $8 million next year.

The prognosis for Metro Transit's sales-tax revenue worsened Tuesday, to a total $416 million in 2010 — compared to $459 million in the November forecast.

This jeopardizes the county's long-term ability to deliver massive service expansions promised in the "Transit Now" campaign of 2006, when voters raised sales taxes.

On the other hand, Metro will get $25 million in federal stimulus money for maintenance and $46 million to add and replace buses this year. So far, the agency has yet to cut service on the streets.

Councilmember Kathy Lambert, R-Redmond, praised Cowan for being fairly accurate in such a volatile economy. She and Councilmember Larry Gossett, D-Seattle, were the only ones who stayed for the whole discussion in budget committee.