Panel says Hawaii revenues will be a bit worse

AP News
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Posted: Dec 18, 2009 11:43 AM

The state's revenue picture is still dreary but there is light at the end of the tunnel, a panel of Hawaii economists said.

The state Council on Revenues, at its quarterly meeting Thursday, voted to change its estimated decrease in state revenues for the remainder of the fiscal year that ends June 30 from 1.5 percent to 2.5 percent.

In other words, the council believes the state will see about $42 million less than previously expected in tax and other revenues through the current fiscal year, Chairman Paul Brewbaker said.

But the panel also slightly raised its revenue prediction for the next fiscal year, from an increase of 6.5 percent to 7.6 percent.

"At some point you have to realize that the recession's over and that you move to economic recovery," said Brewbaker, the Bank of Hawaii's former chief economist. "We have to build that into the forecast scenario. The problem is, it doesn't come fast enough for most people, and I think that's really where people's concern is."

The council's predictions factor into upcoming political and policy decisions by the Legislature and Gov. Linda Lingle on how much needs to be cut from state spending over the next 18 months.

The state operates on a biennial budget and is in the first year of that cycle now. But Lingle is required to soon submit a supplemental budget for the fiscal year that begins July 1.

Based on the council's predictions, the estimated state budget shortfall will hit $720 million through June and nearly $1.2 billion through June 2011, said Rep. Marcus Oshiro, the top budget expert in the state House.

The council's forecasts are "not good, but it's not as bad as it could have been," Oshiro said.

The bottom line is that state leaders still will have to cut services and/or raise taxes to close the budget shortfall, he said.

"At this point in time, all options should be on the table," he said. Hawaii residents and their legislative representatives must determine which services should be financed and which can be cut or eliminated, he added.

The state could find more revenue by capturing a larger slice of hotel taxes at the expense of counties. County mayors have strongly opposed such a move.

But Oshiro noted that if the state did take more of those tax receipts, it would finance government services that aid the same constituency. "The money is not just going to disappear into the state's coffers," he said.

There was no immediate comment from Lingle's office.