Council on Revenues Projects $44M Revenue Boost This Year
The latest forecast by the Council on Revenues sees a boost in state tax revenues to the tune of about $44 million for the current budget year, and sustained growth through 2017.
If the group’s revised estimate holds true, it will mean much-needed money added to the state’s bottom line. But Hawaii state government still will be in the red.
The Council on Revenues, which puts out reports each quarter, met Wednesday afternoon to revisit its .
By , what the group estimates has to be considered by the governor and lawmakers in determining state expenditures and preparing the state’s budget.
The council only made one change: it increased the tax revenue percentage growth for fiscal 2011, which ends June 30, from 2 percent to 3 percent. The council — with four of six members in attendance — voted to keep its previous forecasts for the following six years unchanged.
That 1-percentage point increase translates into an estimated $44 million boost to the general fund — or $7.33 million in each of the next six months. That could help shore up a projected $71.6 million shortfall the state is facing this fiscal year.
| Fiscal year | Projected tax revenues |
Updated year-over-year growth |
Previous growth forecast |
|---|---|---|---|
| 2011 | $4.49 billion | 3 percent | 2 percent |
| 2012 | $4.89 billion | 10 percent | 10 percent |
| 2013 | $5.19 billion | 6 percent | 6 percent |
| 2014 | $5.5 billion | 6 percent | 6 percent |
| 2015 | $5.83 billion | 6 percent | 6 percent |
| 2016 | $6.18 billion | 6 percent | 6 percent |
| 2017 | $6.55 billion | 6 percent | 6 percent |
Gov. Neil Abercrombie this month to lawmakers that estimates a $771.9 million shortfall in revenues over the next two budget years.
The budget calls for $10.8 billion in spending in fiscal 2012 and $11.1 billion in fiscal 2013. The 2012 budget carries an estimated $410.1 million shortfall in revenues, while the 2013 budget includes a $361.8 million shortfall.
While the council’s revised estimate for the current year might be welcome news, Civil Beat found earlier this year that the group is rarely on targetand when it’s off it’s always too optimistic.
At Wednesday’s meeting, council members Paul Brewbaker, Carl Bonham, Jack Suyderhoud and Rick Kahle talked for about an hour, comparing individual forecasts each brought to the table using different methods and models, before finalizing their predictions. The members asked one another about such indicators as tourism spending, wages and building permits.
A detailed general fund report is due to the governor and Legislature on January 10.
The members entertained the idea of increasing the 10 percent growth projected for fiscal 2012, as well as lowering the sustained 6 percent growth in fiscal years 2013-2017, before deciding to keep those projections unchanged.
“I suggest we spend another six months thinking about what the cycle will look like and revisit it as it gets closer,” said Brewbaker, chairman of the council. “We’ll have more clarity. To knock it down at this moment … I think would be a mistake.”
Bonham pointed out that for the last three decades, average real growth has been less than 2 percent annually.
The group pointed to bright spots, including stimulus money being spent in the current budget year, tourism and visitor spending rebounding, and construction making a comeback around 2015, spurred in part by the city’s proposed rail project.
