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Monday kicked off the first of several budget briefings before the Senate and House finance committees prior to the Legislature convening January 19.

Lawmakers are working with a submitted by Gov. Neil Abercrombie that carries a $772 million shortfall in revenues over the next two fiscal years. It calls for $5.8 billion in general fund spending in fiscal 2012 and $6.1 billion in general fund spending in fiscal 2013.

On Monday’s agenda were economists from the Council on Revenues and the state . Presenting were Paul Brewbaker, chair of the Council on Revenues; Carl Bonham, vice chair of the council and director of the ; and Eugene Tian, acting chief economist with DBEDT.

Here are some highlights of what they shared with members of the Senate Ways & Means Committee and House Finance Committee.

Basically, the economists agree that the state’s economy is recovering, but at a slow pace, with tourism single-handedly leading the recovery. They do differ a bit on their forecasts for state revenues, job growth and recovery of the local construction industry.

Paul Brewbaker

Bottom line: “A recession this deep will require a lot of backfilling and fixing.” But a “strong rise in visitor arrivals” will help boost revenue growth for the state.

This is reflected in the council’s most recent forecast revision, decided on last week, which is not due to lawmakers until Jan. 10. The group increased its estimate for tax revenue growth for fiscal 2011, which ends June 30, from 2 percent to 3 percent — or an estimated $44 million for the general fund. It kept its previous forecasts for the following six years unchanged — 10 percent in 2012 and 6 percent each year thereafter.

Jobs

Payroll employment will see a slow recovery for at least another year before gradually accelerating. Jobs are always the last thing to catch up between recovery and expansion. Hawaii can expect to see no more than 1 percent growth annually.

Visitors

Big improvement, but there’s an amount of uncertainty attached. And the improvements aren’t statewide: Oahu and Maui are recovering quicker than the Big Island and Kauai. There’s not as much interisland travel as before.

International travel was pushed down by H1N1 scare. Recovery is proceeding at a decent rate, but not like North America travel to Hawaii.

Homes

Home sales were boosted in the second half of 2010 by low interest rates and new-buyer tax credits, but are starting to level off. Expecting fairly quiet years before things perk up in the 20-teens.

Construction

No turn yet.

Carl Bonham

Essentially, the recovery so far is in tourism. No other sector is seeing a recovery. (He referenced a UHERO forecast released in October, which said that any tourism gains have not had an effect on the broader economy.)

Visitors

We’ve seen a surge in arrivals over the last six months. Visitor arrivals are up, but we’re still down 5 to 6 percent from 2006-2007 levels. Visitor spending has increased more than arrivals. Hawaii visitor arrivals were up 18 percent in November, spending was up 30 percent, compared to a year ago.

Jobs

Job growth is improving, but very slowly. Across all sectors, we can expect a little more than 1 percent growth for 2011. Job growth will be a key to continued recovery; we need sustained growth of 1 percent to 2 percent annually.

Homes

Real estate and construction outlook stabilizing, but residential building permits at record lows. Home prices stabilizing sooner than expected, should rise over the next four or five years.

We might appear to have a balanced market if you’re looking at inventory in the MLS, which shows we’re selling roughly half the units for sale. But, if you count foreclosures and properties that are 90 days delinquent, which don’t show up in the MLS, we have twice as much inventory.

Construction

Growth has been on the commercial side. The value of commercial and industrial building permits was up 28 percent during the first 10 months of 2010.

As home prices rise, builders will start building new homes or revisit projects that were put on hold.

Asked by Sen. Will Espero what the council suggests lawmakers can do to boost or help our economy, Bonham said:

“Really, for state government, it’s not their role to boost or try to make the economy better … They should provide the public with services they need: infrastructure, safety, health and well being of those who can’t help themselves. And should try to avoid things on the side — Act 221, for example — picking a sector to bolster with the idea that it will change the nature of economy. The economy will get itself figured out … One piece, which you may not look at this year, is to look at long-term liabilities at the state level. We need to start looking at addressing those.”