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The Honolulu Advertiser

Posted on: Saturday, May 7, 2005

Tax take for state increases by 14.6%

Associated Press

General fund tax revenues for the first 10 months of the fiscal year are running 14.6 percent ahead of the previous year, state tax officials said yesterday.

Figures from Tax Director Kurt Kawafuchi show that the state took in $323 million in general fund revenues in April, boosting the 10-month total to $3.2 billion.

General excise tax collections, the largest category of collections, were up 10 percent for the 10-month period, Kawafuchi said. The transient accommodations tax collections, also referred to as the hotel room tax, were up 7.9 percent, and individual income tax collections were up 15.8 percent.

The state Council on Revenues has predicted an 8.8 percent increase in tax revenues for the 2005 fiscal year, which ends June 30.

Gov. Linda Lingle said she predicted a 15 percent increase for the fiscal year, and "it's tracking just about there."

After the Council on Revenues at its last meeting predicted an increase in growth for the near term but lower levels of growth in the long term, Lingle said she requested additional information from the panel "because I didn't see it that way.

"In looking forward I asked them to provide me with some more models. What did they use to reach that kind of conclusion? I didn't think there was any basis for it," she said.

The governor said she doesn't believe she has received a response from the council.

"I'm inclined to think it's a matter of catch-up," said Bank of Hawaii chief economist Paul Brewbaker, a former member of the council.

He raised the question of whether the tax revenue total is so much higher this year because it was so much lower than expected last year.

In the past few years, he said, there has been a proliferation of tax credits, which lower tax revenues. "Once the credits are exhausted, it looks like extra money," he said.

"There is the appearance of a windfall, but the state's economy is growing no faster today than in each the two prior fiscal years," Brewbaker said. However, he believes that economic growth will continue, but not at a pace the tax revenues figures seem to indicate.