Posted on: Wednesday, December 12, 2001

State tax revenue grew in November

By Kevin Dayton
Advertiser Capitol Bureau Chief

In a bit of surprising good news, state tax collections continued to grow slightly last month despite a national and state recession and the shock of the Sept. 11 terrorist attacks.

Tax collections in November grew by 0.3 percent over collections for last November, and by almost 3 percent in the first five months of the fiscal year that began July 1.

That is hardly robust growth, but it is considerably better than some people expected, given the plunge in visitor arrivals and abrupt layoffs in the hotel industry following the Sept. 11 attacks.

"Things may not be as bad as the initial indications," said James Mak, professor of economics at the University of Hawai'i-Manoa. "Hopefully it won't be as bad as most people feared."

The November tax collections announced yesterday reflect business done in October, and Mak said the economic picture might improve from there.

The Federal Reserve yesterday cut interest rates for the 11th time this year, and Mak said the national recession should be coming to an end.

Leroy Laney, economics professor for Hawai'i Pacific University, said federal tax refunds and raises for teachers and other public workers have helped to boost spending and incomes.

Lower interest rates have boosted car sales and triggered a wave of mortgage refinancing, Laney said, which in turn provided some families with more disposable income.

So far this fiscal year the state has collected almost $1.32 billion, or 2.6 percent more than at this point last year, according to statistics released yesterday.

Predictions of a sharper decline in tax collections have Gov. Ben Cayetano and lawmakers preparing to make budget cuts for this year and next.