Fiscal ’98 state tax
revenues trail last year

The 1.6 percent drop
comes in contrast to projections
of a 1.4 percent increase

From staff and wire reports

Through the first seven months of the state's fiscal year, state tax revenues are trailing those of last year by 1.6 percent, according to the state Department of Taxation.

That's bad news for state lawmakers who are trying to balance the state's budget based on the state Council on Revenue's December forecast for a 1.4 percent growth in revenues this year. The council is scheduled to meet March 6 to decide whether to revise its projections.

January's revenues dropped $12.3 million, or 4.2 percent, to $282.3 million from $294.6 million in January 1997, the Tax Department said yesterday.

Gov. Ben Cayetano, however, noted that January ended on a Saturday, creating one less day for collections in the month.

"If you're talking about a significant shortfall, then we need to pay attention," he said yesterday. "However, we can't be reacting month-to-month and quarter-to-quarter." he said.

"We need to set a course (for balancing the budget), and we have and we need to proceed accordingly," Cayetano said, apparently referring to his recent message to lawmakers outlining $111 million in general fund cuts.

Still, collections from the state's largest revenue source, general excise and use taxes, plummeted 10.1 percent, or $13.1 million, last month from January 1997. The cumulative collections from general excise and use taxes for the year to date dropped 4.4 percent, or $37.4 million, from the same period the previous year.

These taxes provide about 40 percent of all general fund revenues.

Another key element is that hotel room tax revenues, a reflection of the vital tourist industry, dropped 20.8 percent or $2.1 million in January compared with January 1997. Thus far in the fiscal year, the room tax revenues are down 1 percent from the same seven-month period in 1997.

That decline is bad news for the four counties which share 95 percent of the revenues from 5 percentage points of the room tax. Revenues from the other 1 percent goes to pay off money borrowed to build the Hawaii Convention Center.