Posted on: Wednesday, December 11, 2002

Tax revenues falling short of growth forecast

By Bruce Dunford
Associated Press

State tax revenues so far this fiscal year are trailing last year's and are falling far short of the 6.1 percent growth forecast by the state's Council on Revenues for the full year, according to a report released yesterday.

If the revenue growth rate doesn't improve over the next seven months, Gov. Linda Lingle and the Legislature would face a revenue shortfall of about $162 million in preparing the state budget.

The $7.5 billion annual budget former Gov. Ben Cayetano prepared last month as a starting point for the Lingle administration, and based on a 6.1 percent revenue increase this fiscal year, called for using most of the $213 million Hawai'i Hurricane Relief Fund, something Lingle has said she will not do.

Lingle said she's not focused on the monthly tax reports and instead will await the Council on Revenues' next official forecast Jan. 10.

The governor and Legislature are required under the state Constitution to use the council's forecast in drafting a balanced budget.

The state Department of Taxation said November's collections totaling $252.9 million were up 2.7 percent over November 2001, despite the so-called "weekend effect."

That means $15.6 million in November tax revenues will be carried over to the December total because November ended on a Saturday, postponing the tax due date until Dec. 2, the department said.

Through the first five months of the fiscal year, however, total collections of $1.309 billion trailed the same period last year by 0.4 percent, or $5.9 million. If the $15.6 million in November taxes expected to be counted in December are applied, the cumulative growth in revenues through five months would be about 0.7 percent. On an annual basis, each percentage point in change represents about $30 million.

With no increase in the growth rate through June, the state would end up taking in $162 million less than the Council on Revenues' September forecast. However, recent forecasts by private and government economists all call for gradual improvement in the state's economy over the next several months.