The state Council on Revenues adjusted its projection of state tax collections upward by about $55 million for the current year on Thursday, but House Finance Chairwoman Sylvia Luke said she will still budget cautiously because the state is still spending more money than it takes in.

Earlier this week, the House Finance Committee approved a proposed $12.7 billion budget for the year beginning July 1, and a $13.1 billion budget for the following year.

Those budgets are scheduled for a vote by the full House next week, and will then be submitted to the Senate for further consideration.

If approved, those proposals will be the largest budgets in state history. Even so, Luke said the proposed House budget for the next two years trimmed more than $650 million from the two-year budget proposal submitted to the state Legislature by Gov. David Ige.

Luke said she explained the cuts to Ige and that he "was very positive" about the approach.

"He is still concerned about what the budget is going to look like, not just the next two years, but for several years after that," Luke said.

The state budget for the current fiscal year that ends June 30 is $12.1 billion.

Luke echoed Ige’s concerns that the state has been spending more from the general treasury than it has been collecting in revenue in recent years, meaning the state has been gradually spending down its cash surplus.

"In layperson’s language, we’re cutting into our savings account," said Luke (D, Punchbowl-Pauoa-Nuuanu). "We’re cutting into our carryover balance."

Much of the increase in the proposed House budget for next year is made up of $162.7 million in raises for unionized workers and exempt employees, which were agreed to by Gov. Neil Abercrombie’s administration, she said.

Another $157.5 million of the increase is in fixed costs such as health insurance premiums, pension contributions, debt payments and money being tucked away to cover future retiree health benefits, Luke said.

Both schoolteachers and units of the Hawaii Government Employees Association, the largest union in the state, are now bargaining for additional raises.

Money to pay for those settlements will somehow also have to be built into the state spending plan for the years ahead, she said.

Luke and the House are also attempting a new budget approach for the University of Hawaii system by proposing to deposit more than $369 million into a single budget classification and allowing university officials and the Board of Regents to decide how to distribute that money around the sprawling UH system.

That sum amounts to the entire general fund subsidy for the university, she said.

Luke described that move as a "drastic change from the past," but said lawmakers will work with the university to see whether delegating that spending power to university officials makes the system more flexible and "accountable."

The House also approved a request from the governor to add a crew of grant writers to the governor’s office to try to maximize federal funding. That request was for about $400,000, and Luke described it as "a small investment, if it can bring in a substantial amount of federal funds."

The Council on Revenues, a panel of economists and other experts who meet periodically to project state revenues, predicted Thursday that state tax collections will grow by 5.5 percent for this year and for the next three years, and will slow slightly to 5 percent per year in fiscal years 2019, 2020 and 2021.

The council’s previous projection for the current budget year was for 4.5 percent growth in tax collections, which means the state will receive an extra $55 million this year that was not budgeted.

Carl Bonham, professor of economics at the University of Hawaii at Manoa and a council member, said the state’s declining unemployment means more Hawaii people are working and have money to spend. At the same time, the state is experiencing "slow growth" in tourism, and a rebound in the construction industry is underway.

Luke said she believes that the relatively even rate of 5.5 percent or 5 percent growth in tax collections indicates good economic health. "This is the way that we want the economy to look," she said. "Very stable."