Economic lag not too much cause for worry
Economists predict a slight drop in state revenue collections in the next two years.
OPTIMISM about the state's economic growth has been tempered by leveling tourism and flagging construction, but predictions for lower revenue increases don't seem too worrisome.
Still, taking a more cautious approach to spending, as lawmakers did this year, would be prudent when budget considerations come up again.
The state Council of Revenues, made up of economists who forecast tax collections on which budgets are predicated, has lowered projections for fiscal year 2008 from 6 percent to 5.7 percent and from 4.1 percent to 3.76 percent for 2009. The council also sees a slight increase to 4.86 percent from 4.6 percent in 2010.
Though the changes appear small, each percentage point represents about $45 million in revenue. Previous downward adjustments have prompted Gov. Linda Lingle to withhold funding from agencies and programs while her budget officers review spending policies.
The governor earlier this summer warned all state departments that she will portion out funding quarterly. Lingle also kept back $110 million from the Department of Education, nearly half the money allotted for public school repairs as collections fell $115 million below expectations.
While Council chairman Paul Brewbaker noted volatility in the economy, he also sounded hopeful that still-pending removal of restrictions on tourists from China and South Korea could boost the visitor industry and revenue collections.
That said, construction and other nontourism spending provided Hawaii with significant vitality in the last few years, and a slowdown of the broader economy could continue to trim revenues.
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