State tax revenues lag
forecast at half-year mark
State tax revenues through the first half of the fiscal year were up only 1.8 percent over the same period last year, despite a 5 percent increase in December bolstered by $45 million in electronic transfers on the last day of the year, Gov. Linda Lingle said yesterday.
The Department of Taxation's monthly report on tax revenues is more than three days late from its usual release date. Director Kurt Kawafuchi said more time was needed this month to analyze the figures and said he expected the report would be released today.
The state Council on Revenues has forecast a 5.2 percent growth in the fiscal year ending June 30, meaning the average increase in the remaining six months will have to be considerably higher to meet the target forecast.
The Legislature and the administration are required to consider the council's forecast in drafting the state's budget and spending plan.
Lingle said the remaining six months usually are some of the best for tax revenues and the amount taken thus far has yet to include revenues from the holiday spending period in December.
The governor said until the state received the $45 million electronic transfer Dec. 31, "we thought it was going to be a much worse report than that. We were tracking it daily in December and to see that coming on December 31st was a pick-me-up for us."
"I think January, February and March will show very strong and hopefully throughout the rest of the fiscal year," Lingle said.
By the time the Council on Revenues meets again in March, the state will get a better feel of where it is, she said.
As a precaution, the administration continues to have a freeze on new hires without a review unless its in a category previously exempt from the freeze, Lingle said.
Kawafuchi said the December revenues showed improvement in the general excise and use tax categories, reflecting what appears to be an improving economy and business climate cited by the council in its forecast.
However, he said there continues to be declines in income taxes, especially in the corporate income tax revenues, possibly linked to the continuing impact of tax credits approved in recent years in an attempt to stimulate business and investments.