The state Council on Revenues sees a general fund dip of 1.6%
POSTED: 01:30 a.m. HST, May 27, 2011
LAST UPDATED: 01:30 a.m. HST, May 27, 2011
Hawaii's recovery from the global economic recession is expected to continue in coming years and slowly begin a shift toward expansion, the state's top economists said Thursday in issuing a static economic forecast for the fiscal year.
The state Council on Revenues left unchanged its general fund forecast from March 29, predicting a 1.6 percent drop in revenues in the 2011 fiscal year that ends June 30, to be followed by a rebound to 11 percent growth in the 2012 fiscal year.
Steady growth of 6 percent per year is predicted through fiscal year 2017.
"We just reaffirmed where we were last time," said Paul Brewbaker, council chairman. "We had taken a couple things into account last time like the seismic events in Japan. We've been taking things like oil prices into account, and there really wasn't much reason (Thursday) to change our view of that."
The static forecast means the Legislature will not have to come back in a special session to tweak the $11 billion and $10.9 billion budgets approved earlier this month for the next two fiscal years.
House Finance Chairman Marcus Oshiro called the forecast "good news."
"Maybe we're finally turning the corner on climbing out of the effects of the Great Recession," said Oshiro (D, Wahiawa-Poamoho).
Oshiro and Senate Ways and Means Chairman David Ige (D, Aiea-Pearl City) noted lawmakers crafted the biennial budget on the projection of a 2 percent decline in revenues for the current fiscal year — giving the state a cushion of $25 million to $40 million. Lawmakers also gave the governor the authority to tap various special funds to fill a $1.3 billion deficit.
"It clearly means there's no need for a special session," Ige said. "If the governor exercises all of the fiscal measures that we passed to transfer moneys out of the various funds, we should be able to balance in the current fiscal year."
Gov. Neil Abercrombie issued a statement pledging to work within the budget and touting new partnerships, including a $10 million grant from the Harold K.L. Castle Foundation for education initiatives.
"We are moving the economy in a positive direction and getting things done to fix government," Abercrombie's statement said. "Our New Day plan is on track."
As of last month, tax collections through the first 10 months of the fiscal year were down 2.3 percent.
State Tax Director Fred Pablo told the Council on Revenues that collections for May are expected to equal or surpass collections from last year, reflecting an increased effort by the Tax Department to collect and deposit tax payments. The department also has ended the practice of delaying tax refunds, as the previous administration began last year, to give it a more accurate assessment of the tax collections.
Thursday's forecast is the last that will be issued by the current version of the Council on Revenues. All seven members' terms are scheduled to expire at the end of June. The Council, which forecasts the revenue base used by lawmakers in crafting the state budget, consists of three members appointed by the governor to four-year terms and one each appointed by the Senate president and speaker of the House to two-year terms.