Revenue outlook aligns with lawmaker plans
State tax growth is remaining about even with the rate of inflation, 6 percent, according to the Council of Revenues.
The council yesterday met and decided to keep their December prediction of 6 percent. The number is important because the state budget, now estimated at $5.2 billion for the next fiscal year, is pegged on the council's figure.
If state tax revenue goes up, the Legislature and the governor plan on a larger budget; if the number goes down, the state budget also goes down.
Paul Brewbaker, council chairman and Bank of Hawaii chief economist, said Hawaii's economy is being pushed in several directions, but not enough to mark a decisive trend.
"There is no enough going on to lead us to change the forecast. There are a lot of swirling cross-currents," Brewbaker said.
One puzzling item for Brewbaker and the six other economists on the panel was that while inflation is estimated at 5.9 percent, general excise tax collections have not risen by a similar number.
"The GET should move up and down with inflation, but we are not getting the same feedback," Brewbaker said.
Lowell Kalapa, Hawaii Tax Foundation executive director, said the council should be reflecting a slowed economy.
"Change is already happening. The economy is getting slower and everyone is feeling it," Kalapa said.
The state House on Monday approved a $10.5 billion two-year state budget that was just $17 million less than Gov. Linda Lingle's recommended budget.
Rep. Marcus Oshiro, House Finance Committee chairman, said the decision to keep the growth rate at 6 percent means the council is optimistic.
"I'm thinking beyond the next several months and looking at national trends. I want to be hopeful, but at the same time, we need to prepare for leaner times," Oshiro said.
The House's conservative approach to the budget was echoed by Sen. Roz Baker, Ways and Means Committee chairwoman.
Baker said she didn't expect to make wholesale changes to the budget presented to the Senate.
"I imagine that we are somewhere in the ballpark with the House. If there is any growth, it would be in the area of CIP (state construction projects)," Bake said.