Revenues sees isle
State financial indicatorsBy Pat Omandam
point to a better economy,
for this year and next
Personal income in Hawaii is expected to grow by 3 percent this year and 3.5 percent next year, according to projections by the state Council on Revenues.
The council, which prepares quarterly revenue estimates of state government for each fiscal year of the six-year state financial plan, believes overall indicators show an upward trend, a sign that the state economy is improving, said Michael A. Sklarz, the council chairman.
Sklarz said the group of economists agreed that total personal income -- which increased 2.5 percent in both 1997 and 1998 -- will get better.
Personal income is one of the most important indicators in the council's revenue forecasts, and is given much weight in its projections, he said.
Signs that the economy is improving can be seen in the latest Hawaii business confidence survey conducted by the Bank of Hawaii. Paul Brewbaker, a council member and the bank's chief economist, said results of the August 1999 survey showed expectations by businesses about sales, their industries and the overall economy are up to the highest levels since 1991.
Of the 775 firms who responded to the survey, 40.7 percent expected a sales increase, while only 18.9 percent expected a decrease. When asked about profitability, 34.4 percent expected an increase, while only 25.2 percent expected a decrease.
But while businesses are optimistic of growth in their industry, they are still waiting for the economy to improve further before they hire more people. That is one of the reasons that figures on job growth lag behind other indicators showing an improving economy, Brewbaker said yesterday.
"These firms want to see their bottom line improve before they take that bottom line and give it to a new employee," he said. "They want to build back up some of what they lost in the hard times."
Brewbaker said the survey validates economic statistics that show a better economy, as well as a shift in sentiment that people are confident about a brighter future.
The council will meet twice in December to discuss the next revenue forecast for the state. Last month, it projected a 1.9 percent revenue growth for this fiscal year.
By law, the council's estimates must be considered by the governor and by state lawmakers in preparing the state budget.