Isles' tax decline typical


POSTED: Wednesday, March 24, 2010

As bad as Hawaii's budget crunch has been, the state's drop in tax revenues is about on par with the national average and much better than many other states, according to the U.S. Census Bureau.

Hawaii tax collections were $4.7 billion in last year's federal fiscal year, which ended Sept. 30, down $434 million, or about 8.4 percent, from $5.1 billion during fiscal 2008, the bureau said yesterday.

The state's drop in tax collections nearly matched the national 8.6 percent drop nationwide among states. Total state government tax collections for 2009 were $715.2 billion, down from $782.1 billion in 2008.

All except five states reported decreases. Hawaii fared better than at least 14 states that experienced tax collection drops of 10 percent or more.

The five states to see increases in fiscal 2009 were Wyoming, North Dakota, Oregon, Iowa and South Dakota. Alaska saw the deepest drop in tax collection, 41.2 percent, thanks to a 44.8 percent drop in severance tax revenue.

The data is used as an indicator of the financial condition of each state government, said Lisa Blumerman, chief of the Census Bureau's Governments Division.






        The following are some of the largest tax collection increases and decreases in other states. Hawaii saw an 8.4 percent decrease in tax collections in the 2009 federal fiscal year.


        » Wyoming: 14.9%
        » North Dakota: 4.4%
        » Oregon: 1.9%
        » Iowa: 1.3%
        » South Dakota: 0.9%
        » Alaska: -41.2%
        » Arizona: -17.9%
        » South Carolina: -15.5%
        » New Mexico: -14.1%
        » California: -13.9%


The collection shows that Hawaii's economy has fared better than many in the country, but also exposes its vulnerabilities, said Paul Brewbaker, economist and principal of TZ Economics and chairman of the state Council on Revenues.

“;Our state was not as bad as elsewhere,”; Brewbaker said. “;But that's after having to go through extreme lengths to deal with fiscal challenges. We've had to make bigger adjustments.”;

Those adjustments include Furlough Fridays in schools, a decision that drew fire in Hawaii and nationwide.

Sales and gross receipts tax collection took a large hit, going from $3.3 billion in 2008 to $3.1 billion. Tourism, which saw drops in visitor spending and arrivals last year, generates much of the gross receipts tax collection.

“;In the future, it might be worth thinking about building in to the tax code more resilient sources of revenue,”; including increased user fees for things like road usage, Brewbaker said.

He said Hawaii was shielded from much of the housing crisis that plagued many states, including California, which saw a 13.9 percent drop in tax collections.

The decline of revenue from mortgages, deeds or securities resulted in a $2.8 billion loss nationwide, a 36 percent decrease, with the largest decrease in the Southern states.

The Council on Revenues is expecting a revenue growth of 6 percent for the state government in Hawaii's next fiscal year, which begins in July, and tax collections have begun to bounce back.

“;We have a good system that's highly sensitive,”; Brewbaker said. “;So as you look down the road, there might be redesigns to dampen some of that sensitivity.”;


» U.S. Census Bureau data on Hawaii's tax collection