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Tax law changes lead to projected growth in state revenues

By Star-Advertiser staff

LAST UPDATED: 4:47 p.m. HST, Sep 6, 2011


State economists continue to forecast a slow recovery from the recession, but have predicted revenue growth over the next two fiscal years as a result of tax law changes passed by the Legislature this year.

The state Council on Revenues today issued its quarterly general fund forecast, predicting revenue growth of 14.5 percent in the current fiscal year that ends June 30, 2012, up from 11 percent predicted in July. 

Revenues in the next fiscal year are expected to climb 6.5 percent, up from 6 percent in the previous forecast, with more modest growth forecast in succeeding years.

The increases are due primarily to temporary tax law changes that were expected to bring in more than $300 million to help balance the budget.

Changes included a cap on the amount of hotel room taxes distributed to state agencies and the counties, an increase in the rental vehicle surcharge and the temporary suspension of general excise tax exemptions on nearly two dozen business activities. Those changes all are scheduled to expire after two years.

Council on Revenues Chairman Richard Kahle said all other sectors of the economy have remained stagnant, with virtually all of the increased revenue coming from the tax law changes.

The state ended the 2011 fiscal year on June 30 with a general fund balance of about $4.3 billion, according to preliminary estimates by the state Tax Department.


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