State tax revenue jumps by $125M | Honolulu Star-Advertiser

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The panel of experts tasked with projecting state tax collections now calculates that tax revenue for this year will grow by a robust 7.3 percent, which means the state has an extra $125 million on hand to help cope with floods, lava flows and any other surprises.

The state Council on Revenues previously had predicted tax collections would grow by 5.3 percent this year from last year, but the statewide tourism boom has helped to fuel actual collections well beyond that level.

State lawmakers and the governor are required to use the council’s projections as the basis for their budget proposals, and each adjustment of 1 percentage point amounts to a change of more than $60 million. That means the state will receive about $125 million in unbudgeted tax collections for the year that ends July 1.

Gov. David Ige’s administration already was predicting the state would end this fiscal year with a cash surplus of more than $1 billion, and this new projection by the Council on Revenues simply adds to that rosy bottom line for the state.

Assuming the administration projections are correct, this will be the second time the state has had a surplus of more than $1 billion in the last three fiscal years.

House Finance Chairwoman Sylvia Luke said lawmakers expected state tax collections for this year would be higher than the Council on Revenues previously projected, and therefore decided late in the legislative session this year to boost spending.

Lawmakers OK’d a bill to appropriate $200 million extra for development of rental housing and also allocated $125 million for recovery from the floods on Kauai and Oahu last month.

“Because we knew that the tax collections were going to end up where it is, we were able to make those huge cash commitments” for next year, she said. With that extra spending, the state surplus is expected to drop to about $700 million at the end of the next fiscal year, Luke said.

The Council on Revenues also adjusted its projection for growth in tax collections upward for the year that begins July 1, increasing that estimate to 5 percent from 4.5 percent.