Cayetano touts
rising economy;

Lingle knocks ‘rosy picture’

He points to a 4.9 percent
rise in tax revenues
this fiscal year

By Mike Yuen
Star-Bulletin

Although tax revenues for last month were flat when compared to the previous September, Democratic Gov. Ben Cayetano continues to see the state's anemic economy turning around, while his Republican challenger, Maui Mayor Linda Lingle, remains unconvinced.

Cayetano yesterday saw positive signs of an economy on the upswing in the latest monthly tax revenue report, because the cumulative totals for the first quarter of the current fiscal year show tax revenues have increased 4.9 percent when compared with the first quarter of last year.

"The 4.9 percent increase is a very strong growth rate compared to the Council on Revenues' forecast of 0.6 percent for the current fiscal year," Cayetano said.

But the cumulative 4.9 percent increase is a drop from the 7.9 cumulative increase recorded after the first two months of the fiscal year, which Cayetano was also touting last month.

Lingle sees the economy as Cayetano's Achilles' heel, and she has made it the centerpiece of her campaign to unseat him.

"For the past six months, Gov. Cayetano has said the economy is not the main issue in the campaign. As the final days wind down and he starts realizing this is the major issue in the campaign, he's trying to paint a rosy picture," said Lingle, noting steep dips in hotel room occupancy and mounting bankruptcies.

Cayetano said the 1.1 percent, or $3.8 million, increase in first-quarter revenues from general excise and use taxes -- the state's largest revenue source -- is modest growth. "But compared to the 4.8 percent decline during the April-June (1998) quarter, this is a significant improvement," Cayetano said.

He did not focus on last month's excise and use tax revenues, which fell 8.5 percent from September 1997. Nor did he mention that revenues from the hotel room tax were down 10 percent last month, resulting in a 2.1 percent decline in that category for the first quarter this fiscal year.

He did say the 1.1 percent first-quarter revenue growth is attributable to increases in productivity, consumer spending, real estate sales and state government construction spending having worked to offset the decline in total visitor arrivals for June through August.

State Tax Director Ray Kamikawa said last month's tax revenue growth would have been 5.5 percent -- and not flat -- were it not for last September, which had higher-than-usual collections because August ended on a weekend, throwing some August collections into September.

Last month's tax collections totaled $273.9 million, compared with $273.8 million last September. For the first quarter of this year, it was $739 million, compared with $705 million for last year's first quarter.