Posted on: Thursday, September 6, 2001

Council on Revenues still projects 4 percent increase

By Kevin Dayton
Advertiser Staff Writer

Despite some troubling signs that Hawai'i's economy may be slowing, the state Council on Revenues yesterday stuck with its earlier estimates that the state will collect 4 percent more in taxes this year than last year.

Council members worried that inflation in Hawai'i is lower than expected and the construction industry isn't as strong as anticipated — factors that tend to reduce state tax collections.

But state tax officials estimate that tax collections for July and August, the first two months of the fiscal year, grew about 2 to 3 percent above the same period last year.

Meanwhile, council members noted the federal government will soon inject hundreds of millions of dollars into Hawai'i via tax refunds and payments of overdue cost-of-living allowances for federal employees.

"We're seeing some slowing, and yet we still have some pretty good momentum in the economy," said council Chairman Michael Sklarz.

The council is a panel of economists responsible for projecting how much the state will collect in taxes this year and in the years to come. The estimates by the panel form the foundation of the budgets drafted by Gov. Ben Cayetano and the Legislature.

The council predicted earlier that tax collections would grow by about 5.1 percent this year, but tax officials revised that downward to 4.1 percent after the Legislature and Gov. Cayetano agreed this past spring to turn over about $30 million a year in public service company taxes to the counties.