Hawaii's economic recovery is well under way, and revenues for this fiscal year are expected to be 0.5 percent more than last year, said the state Council on Revenues.

The council reversed yesterday its earlier prediction of a 2.5 percent drop in general fund revenues made in March.

“;A small negative is now closer to zero,”; said council Chairman Paul Brewbaker, also the principal for TZ Economics. “;We've gone from falling way farther than we ever thought, to rebounding a little bit more than we were forecasting.”;

The council's projection took into account the state's early release of $125 million in tax refunds, which should be paid out by today.

There were about $207 million in total claims this year. The state planned to delay all 2009 refunds within the legally allowed 90-day refund period until July to soften an expected $721 million revenue shortfall for fiscal 2010, which ends next month.

Tax collections have improved every month since the beginning of the year, according to the state Tax Department. Through April, fiscal 2010 collections were down 1 percent from the previous year, the department said. The state had about $3.6 billion in the general fund, including the withheld tax refund cost.

  Hawaii Economists Predict Dramatic Turn Around

 

The state's top economists today predicted a dramatic turn around for the state.

 

[ Watch ]

 

 

 

 

“;The latest project reflects an improving economy and is an encouraging sign that Hawaii is headed in the right direction,”; Gov. Linda Lingle said yesterday. “;While the upward adjustment is positive, we need to remain focused on creating jobs, stimulating our economy and monitoring the state's cash flow.”;

Much of the council's meeting yesterday centered on how to make a projection when the state was only doing a partial release of refunds. State tax officials could not commit yesterday to releasing the remaining $82 million before the July 20 deadline.

The council then had to factor in a number of tax laws passed by lawmakers in the recent session. This includes the barrel tax on oil products, which was expected to generate about $25 million a year.

After factoring in the new tax laws, the council projected a 6.2 percent growth in revenues for fiscal 2011, growth rate that might hold all the way through 2016. Brewbaker said Hawaii will see “;sustainable growth rate”; in the near future.

“;Visitor accounts are going back up, underlying growth in the U.S. economy is good, certainly Asian economies are doing well,”; said council Vice Chairman Jack Suyderhoud, also an economics professor at the University of Hawaii. “;Of course, there are uncertainties out there. Europe is a cause of concern. You hold your breath and hope not too many things happen.”;