State revenue forecast is bumped up again

A panel of economic forecasters painted a rosier financial picture for the state Tuesday, projecting Hawaii tax revenue increases of $50 million in the fiscal year ending June 30 and $66 million next fiscal year.

The forecast, made Tuesday by the Council on Revenues, will give state law- makers a new reference point for crafting a budget for the coming fiscal year and should give Gov. David Ige’s administration more money to work with in the last four months of this fiscal year.

The council increased its projected growth rate for general fund revenue to 5.3 percent from 4.5 percent projected in January. The difference equates to about $50 million, or $6.65 billion compared with $6.6 billion.

For the coming fiscal year, the council upped its growth projection to 4.5 percent from 4.3 percent. That would take revenue to about $6.95 billion, up almost $70 million, from about $6.88 billion that was projected in January.

The council is made up of local economists, accountants and business executives who consider factors including past tax collections, tax law changes, job growth, inflation and other factors weighing on Hawaii’s economy.

For the first eight months of this fiscal year, July through February, general fund revenue is up 6.9 percent, according to the state Tax Department.

Carl Bonham, a University of Hawaii economist on the council, said the growth through last month was the primary factor for the council’s higher forecast.

“There was much discussion of the overall strength of the economy, but also concern about stagnant income growth, the possibility that we have already passed peak growth rates for tourism spending, and general uncertainty surrounding the global economy,” he said after the council meeting.

State Sen. Donovan Dela Cruz, chairman of the Senate Ways and Means Committee, said in a statement that the latest forecast is good news for short-term obligations but that he is concerned with long-term obligations that include state employee pensions, health care costs and potential wage increases through collective bargaining.

The Ige administration in February projected a $956 million general treasury surplus at the end of this fiscal year, but Dela Cruz said budget cuts and bills that would generate more revenue are being considered at the Legislature to offset projections in higher future spending. He also said the state’s rainy day fund, which is at $317 million, should be $700 million.