Council on Revenues meets this week

The Hawaii Council on Revenues will meet this week Thursday, May 27th at 2 p.m. The COR will provide an update on the revenue forecast for this fiscal year through 2016. If you are following the Council's projections, you may want to read the last projections from March 2010 as a comparison. The report is here.

Each percentage point change is about $45 million in tax revenues. In March, the COR predicted:

2010 (-2.5%)

2011 (+6.0%)

2012 (+6.0%)

2013 (+6.0%)

2014 (+6.0%)

2015 (+5.0%)

2016 (+5.0%)

Council on Revenues General Fund Projection December 2009

The Hawaii Council on Revenues met today to, among other business, announce the latest general fund revenue projections for fiscal year 2010 and beyond.


For FY2010, the new projection is -2.5%, down from -1.5% forecast in August. For FY2011, the Council raised the forecast from 6.5% growth to 7.6% growth.

Here are the revenue projections through 2016. The percentages reflect the level of growth or decline from the previous year.


2010 - 2.5%

2011 - 7.6%

2012 - 6.0%

2013 - 6.0%

2014 - 6.0%

2015 - 5.0%

2016 - 5.0%

Council on Revenues Projections May 2009

Left to right: Rep. Ryan Yamane, Rep. Marilyn Lee, Rep. Marcus Oshiro, Senator Donna Mercado Kim, and Rep. Michael Magaoay.

The Council on Revenues met today to update the state's General Fund Revenue forecast. Present were Chair Paul Brewbaker, Vice Chair Jack Suyderhoud, and members Carl Bonham, Pearl Imada Iboshi and Richard Kahle.

The Council projected that revenues for FY09, which ends on June 30, 2009, will decrease by -9% growth from the previous year. This past March, the Council projected -5% for FY09. House and Senate money committee staff calculate that the state is faced with a loss of $185.7 million for FY09. The Council projected flat growth for FY10.

The impact of the new projections over the next biennium is a total shortfall of $611.5 million. ($185.7 for FY09, $207.7 for FY10 and $218.7 for FY11.)

Immediately following the Council meeting, House and Senate members held a media availability to respond to the news. They indicated that the Governor will most likely need to make deeper budget cuts, as well as freeze spending for certain programs through the end of the year. Asked if the Legislature would return for a special session this summer to address the deficit, they said that they would need to discuss the matter with their respective caucuses.

Update on Tax Collections

According to our House Finance wizards, the general fund tax collections for October 2008 have been released, and the report is not good. For the month of October, general funds collected were -9.5% down compared to October of last year, and -1.3% down, cumulatively, for the first four months (July, Aug, Sept, Oct) of this fiscal year, FY09.

The Council on Revenues' latest projection for FY09 is at -0.5%, and that is the projection that will be used by the administration and the legislature in working to balance our state budget. However, the Council is expected to meet again in January, and we'll see if the projection changes given the actual revenues for the year so far.

Here is a breakdown:
General excise taxes are at -3.2%
Corporate taxes are at -21.4%
Incomes taxes are at +1.1%
Other taxes (alcohol, tobacco, etc.) are at +8.1%

Also, Transient Accommodation Taxes (TAT), which do not go to the General Fund, are at -6.9%. The TAT goes to the counties and the Tourism Special Fund.

State tax revenues rose 1.2% in 2008

With the exception of the A.P. story in the Star-Bulletin, I didn't see much in the news media on the fact that the Department of Taxation released year-end 2008 revenue figures. While revenues rose 1.2% for the year ending June 30th, that is significantly lower than the 3.3% rise projected by the Council on Revenues. That translates to about $100 million less money to spend than anticipated.

At 1.2% growth, the tax revenues amounted to $4,640,923,000 or $4.64 billion. At 3.3% growth, the tax revenues were projected to amount to $4,737,859,000 or $4.74 billion. Thus, a difference of $100 million.

Here are some stats:

General excise/use taxes - UP 2.5%
Corporate income tax - UP 4.0%
Individual income tax - DOWN 1.0%
Transient Accommodation Tax - UP 2.0%
All others - UP 1.5%

The Council on Revenues has projected a 2.0% growth for Fiscal Year 2009.

"Island Insights" on Thursday, 7:30 p.m.

On May 29th, the Council on Revenues announced that they have lowered the projection for the state's economic revenue growth for fiscal year '08 from 3.9% to 3.3%. (See previous post for 3/30.) It looks even worse of fiscal year '09, where they have revised their projection from 4.1% growth to 2.0%. The bottom line is that state government will have to tighten its belt significantly over the next two years.

Upcoming - Hawaii Public Television's live public affairs call-in show, Island Insights, will feature the state's economy, the latest Council on Revenues projection, and the legislature's crafting of the state budget.

Guests will be state economist Pearl Imada-Iboshi, who serves as a member on the Council on Revenues; Paul Brewbaker, who serves as the chair of the Council on Revenues and is chief economist at Bank of Hawaii; Kelvin Taketa, President and CEO of Hawaii Community Foundation, and House Finance chair, Rep. Marcus Oshiro.

Tune in tomorrow evening, Thursday June 19th, Channel 10/11, Hawaii Public Television, 7:30 p.m.

Council on Revenues briefs Money Committees

Top left to right: Sen. Roz Baker, and Reps Marcus Oshiro, Marilyn Lee and Mike Magaoay

Bottom left to right: Reps Karen Awana, Tom Brower, James Kunane Tokioka, Roland Sagum
After introductions of the members of the committees (House Finance and Senate Ways and Means), the chairs turned it over to Paul Brewbaker, the chair of the Council on Revenues. Brewbaker is the senior vp and chief economist at the Bank of Hawaii.

In addition to reviewing the recent projection from Wednesday, Brewbaker summarized that the economy is softening, based on facts such as visitor arrivals are down, building permits are down, and the consumer inflation rate is subsiding. That leaves Hawaii with "increased vulnerability to global shocks that come out of the blue."

Pearl Imada Iboshi, State economist with the Department of Business, Economic Development & Tourism, stated that Hawaii growth rates are slowing, but they continue to be higher than the U.S. growth rates. Personal income and job growth rates are expected to maintain stability over the next few years. However, there is concern with the visitor industry growth, especially in the cruise industry.

Carl Bonham, Exec. director of UHERO, UH Economic Research Org., gave an economic forecast. He stated that developers are being squeezed from the bottom. In the commercial sector, "plans don't pencil out. You can't get the rent that will cover the cost of construction." As a result there is a slowing in permitting for both commercial and residential construction. Regarding home prices, speculators are gone. Visitor expenditures are largely from US visitors, but that is also where there is the most risk with the possible recession in the US economy.

Photo: Carl Bonham at the podium, Pearl Imada Iboshi at front, Paul Brewbaker seated in back (wringing hands?)