Monday, July 28, 2014         

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Tax refund delay complicates the state's financial forecast

By Star-Advertiser staff


State tax collections are down 2.8 percent through the first half of the fiscal year, according to the state Department of Taxation, but revenues would be up 6.3 percent if the delay in income tax refunds last year is factored out.

The state's revenue picture is improving as the state moves out of a recession. Then-Gov. Linda Lingle's decision to delay income tax refunds to get through the last fiscal year with a smaller deficit on paper continues to influence the forecast, however.

The state Council on Revenues has projected 3 percent revenue growth for the fiscal year that ends in June.

The Abercrombie administration has noted that tax collections must average 7 percent growth over the next six months to hit the council's target.

The council has predicted 10 percent growth in fiscal year 2012 and 6 percent growth in fiscal year 2013, estimates that the Abercrombie administration and lawmakers will use when drafting the two-year state budget this session.

General excise and use taxes — the largest single category of state revenue — are up 5.6 percent over this time last fiscal year. Hotel room tax revenues are up 17.7 percent, a reflection of the rebound in tourism.

Individual income tax collections are down 21.9 percent. Corporate tax collections are off 197.7 percent, a figure, like with income tax revenues, heavily influenced by refund calculations.

Gov. Neil Abercrombie has said he would use emergency money to get through this fiscal year and has proposed a series of tax increases, spending cuts to health care and welfare programs, and labor savings to close a two-year budget deficit estimated at about $700 million.

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