Economists expect 2004 to be rosy
By Gordon Y.K. Pang
Advertiser Capitol Bureau
Hawai'i's economy continues to outpace most of the rest of the nation, state experts told lawmakers during a hearing at the State Capitol yesterday.
"Measured in terms of job growth, unemployment rates or real personal income growth, Hawai'i ranked among the top five or top 10 states," said Paul Brewbaker, senior vice president and chief economist for Bank of Hawai'i.
"The construction sector is going to continue to drive growth over the next couple of years," Carl Bonham said.
A recent forecast, Brewbaker said, "anticipated more than 2 percent growth in Hawai'i payroll employment; around 3.5 percent growth in Hawai'i real personal income; local inflation below 2 percent; resilient, if turbulent, tourism performance; and continuing growth in construction and real estate investment."
Carl Bonham, executive director of the University of Hawai'i Economic Research Organization, said 2004 should be rosy, with the building industry leading the way, just as it did in 2003 with an 8 percent growth in construction jobs, the highest among all sectors.
One indication that the building boom continues is the 73 percent increase in the value of private building permits from 2002 to 2003. "The construction sector is going to continue to drive growth over the next couple of years," Bonham said, noting that his analysis does not take into consideration the $3.5 billion in anticipated military housing construction over the next decade.
The state Council on Revenues projects a 5.2 percent increase in state revenues during fiscal year 2004, which ends June 30, and a 7.9 percent jump in 2005.
Mike Sklarz, chairman of the council, pointed out that general excise tax revenues, a major source of cash for the state treasury, has been growing more quickly than general fund revenues. All the economists yesterday cited tax law changes, including a series of tax credits designed to stimulate business growth, as a key reason for the discrepancy but differed on how significant or lasting the effect will be.
State Budget Director Georgina Kawamura also spoke to the joint hearing of the Senate Ways and Means and House Finance committees yesterday, providing an overview of the Lingle administration's supplemental budget request for 2005 that calls for an $86.8 million increase in the $4 billion general fund budget, and a $258.6 million increase in the capital improvements project budget.
Kawamura said a number of tax proposals will be unveiled by Gov. Linda Lingle when she gives her State of the State address on Jan. 26. She declined to give details.
Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or at 525-8070.
