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State tax revenue forecast improving; 5% growth predicted

The state Council on Revenues today agreed to increase the state’s tax collection forecast, another positive sign that the economic recovery has taken hold.

The council increased the forecast for fiscal year 2013 to 5.1 percent growth, up from 4.9 percent in September. The council raised the forecast for fiscal year 2014 to 6.8 percent growth, up from the 3.9 percent.

The state Department of Taxation estimates that the new forecast means an additional $10.3 million for this fiscal year, which ends in June, and $162.3 million for next fiscal year.

The Abercrombie administration and state House and Senate lawmakers will consider the forecast when drafting the state’s new two-year budget and six-year financial plan.

A rebound in tourism has driven the state’s economic recovery, but economists on the council believe that other sectors of the economy, such as housing and construction, are poised for growth.

Economists are concerned, however, about the financial impact of the state’s renewable energy tax credits, the debate over federal spending and debt reduction in Washington, D.C., and the potential loss of federal money because of the death of U.S. Sen. Daniel Inouye, D-Hawaii, the former chairman of the Senate Appropriations Committee.

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