POSTED: 11:38 a.m. HST, Jan 5, 2012
LAST UPDATED: 12:35 p.m. HST, Jan 5, 2012
The state Council on Revenues today projected 11.5 percent revenue growth for the fiscal year that ends in June, down from 14.5 percent, a significant loss of revenue for the state.
The Abercrombie administration had based its supplemental budget request on 14.5 percent revenue growth, but had a cushion that would leave a surplus if the forecast was lowered to 13 percent growth.
The new forecast will force the administration to make substantial adjustments and submit an updated budget plan to the state Legislature.
The council left the forecast for fiscal year 2013 at 6.5 percent growth.
Richard Kahle, the council's chairman, said the downgraded forecast for this fiscal year was mostly the result of a change in procedure at the state Department of Taxation. The department has been more aggressive at cashing tax payments, so previous assumptions about the revenue flow last fiscal year have changed, which influenced year-over-year projections about growth.
Gov. Neil Abercrombie said the new forecast reinforced his administration's decision to take a conservative approach in the supplemental budget, but acknowledged that changes will now be necessary.
"The core of our supplemental budget remains solid due in large part to the administration's strong financial management practices and $85 million in savings that were realized over the last year. These new projections reflect the soundness of recapitalization of the rainy day and hurricane relief funds this year," the governor said in a statement.
"We will work with the Legislature as the supplemental budget session begins so that we continue to move forward on a positive track. We'll await the next council projection as the Legislative session proceeds."