Lawmakers wary of fuzzy forecasts
Construction cranes may be reclaiming their spot as the unofficial state bird, and statewide unemployment may still be way below 3 percent, but at the state Capitol the economic talk is gloom, not boom.
Since January, Democratic legislative leaders have been cautioning Republican Gov. Linda Lingle that she was too optimistic with her economic forecasts.
"Spending in the executive budget has increased 44 percent over the last four years," the Legislature warned in its final report on the state budget, House Bill 500. "It is without question that this growth rate is unsustainable over the long term. Indications that Hawaii's economy is slowing provide additional incentive to exercise fiscal conservatism."
Despite the stern language, the Legislature cut Lingle's $10.5 billion, two-year budget by just $16 million over the biennium.
Today lawmakers are predicting future cuts, while Lingle is saying that the economy can support another round of tax cuts.
Also, Lingle noted in a news conference this week that because the state's revenues are expected to be up again, the Legislature next year will be required to give another tax rebate.
Senate President Colleen Hanabusa, a former vice chairwoman of the Ways and Means Committee, says economic research shows a national slowdown that is hurting tourism.
"Japanese tourism is way down and I think it has been enough to affect our economic growth," Hanabusa said.
Hanabusa predicts Hawaii will continue to see actual real economic growth, but not at the pace of past years.
Hanabusa's economic gloom is mirrored by her House counterpart, Speaker Calvin Say.
"Auto sales are dropping, the number of containers coming into the state is going down, troops from Kaneohe and Schofield are deployed," Say said.
"The last session reminds me of the last two years of the (former Gov. John) Waihee administration, just before the economy started to slide," Say added.
Former Senate President Robert Bunda, who represents the Wahiawa area dominated by Schofield Barracks and Wheeler Army Airfield, says the big projects were a boom, but it is ending.
"Military housing is going up all over the place. It is amazing how military spending has boosted the economy, but with the troops gone and tourism down, I agree the economy has slowed," Bunda said.
While most economists measure the state's economy by looking at various sectors, such as construction, job rates and tourism, the state must use the semi-independent state Council of Revenues figures, which are only a prediction of tax collections.
In May, the council reduced the revenue projection to 4 percent from 6 percent, a reduction that could mean a loss of $85 million in next year's budget.
Next month the final revenue figures for the fiscal year will come in and that sets a base for future plans on state spending.
Economists, such as Byron Gangnes with the University of Hawaii Economic Research Organization, report that "the economy is certainly slowing, but it is fundamentally healthy."
The bright spots in Hawaii's economy, Gangnes said, are the job market and continued strong construction.
Tourism, however, has not shown any significant growth in the last two years, Gangnes said.
"The industry appears to be at a plateau today, but it is still solid," Gangnes said.