Tax collections dip further

By Kevin Dayton
Advertiser Capitol Bureau Chief

State tax collections are dropping off more sharply than expected amid the business slump that followed the Sept. 11 attacks, meaning the state budget shortfall may be about $20 million worse than expected.

The state Department of Taxation announced yesterday that collections for the first eight months of the fiscal year that began July 1 were nearly $2.11 billion, or about 1.4 percent less than was collected in the same period last year.

If collections continue on their current course, the state will end this fiscal year with about $20 million less than expected, putting the total decline in projected tax collections for this year and next year at about $335 million.

State lawmakers are already considering measures such as increases in alcohol and tobacco taxes to help offset what they expected would be a $315 million decline in projected tax collections for this year and next.

To cope with the shortfall, lawmakers have also proposed "raids" on special funds where money has been parked for specific purposes, and the state House has also given preliminary approval to a bill that would siphon $100 million from the Hawai'i Hurricane Relief Fund to balance the budget.

The fund now has a surplus of about $213 million, but some critics believe the money should be left in the fund in case another hurricane strikes.

The tax department announced yesterday that collections for February dropped off most sharply for the hotel room tax, which at $14.2 million was off more than 22 percent from collections for February 2001.

Excise tax collections for February were almost $141 million, a decline of more than 6 percent from collections for February 2001. Income tax collections for the month were down about $65 million, or about one-half of 1 percent from last February.

Reach Kevin Dayton at 525-8070 or kdayton@honoluluadvertiser.com.