July tax revenues down sharply

By Bruce Dunford
Associated Press

State Tax Director Kurt Kawafuchi has announced that last month's tax revenues "are down quite a bit" from July of last year, supporting Gov. Linda Lingle's contention that she must continue to curb state spending.

Based on O'ahu figures, which are tracked daily, the July revenues statewide are projected to be down about $20 million from July 2002 after taking into account a $30 million decline resulting from a "weekend effect," he said on Friday.

Kawafuchi said income from general excise taxes, which represent business activity, is up slightly in July. He said he didn't have a breakdown on revenues from the various tax categories.

The official statewide July results will be available this week, he said.

The monthly revenue reports have become fodder in the political conflict between Lingle and Democratic legislative leaders.

When June's income surged 62 percent over June of 2002 and the fiscal year ended 4.3 percent ahead of the year before, House Speaker Calvin Say, D-20th (St. Louis Hts., Palolo, Wilhelmina Rise), and Senate President Robert Bunda, D-22nd (North Shore, Wahiawa), declared that the state no longer had a deficit.

They said there was no need for Lingle to continue imposing spending cuts in public education and other programs.

Lingle accused the Democrats of "painting a false picture" of the state's financial situation by using a single month's revenues to project future revenues.

Based on the state Council on Revenue's latest forecast in May, Lingle computed a $152 million revenue shortfall over the two-year, $7.5 billion general fund budget and ordered most departments to curb first-quarter discretionary spending.

The panel of economists meets again in September to review its revenue forecasts.