Hawaii's tax revenue forecast rises to 0.5%
Hawai'i's economy continues on the upswing with the state Council on Revenues' latest forecast showing an increase in general fund tax revenue for the remainder of this fiscal year and next.
The council met yesterday and predicted a 0.5 percent growth in tax revenues for the fiscal year that ends June 30, compared with a 2.5 percent decline forecast in March.
"The latest projection reflects an improving economy and is an encouraging sign that Hawai'i is headed in the right direction," Gov. Linda Lingle said. "While the upward adjustment is positive, we need to remain focused on creating jobs, stimulating our economy and monitoring the state's cash flow."
The council's forecasts are used by the governor and lawmakers when drafting the state budget.
The upbeat forecast is another sign that the state's economy is recovering from the recession. Improvements have been seen in tourism, the housing market and unemployment .
In April, the state's jobless rate was 6.7 percent, down from 6.9 percent in March and the lowest level in more than a year.
Visitor arrivals and spending also continue to improve over last year. The number of visitors to the Islands increased 1.9 percent in April compared with the same month in 2009, and spending rose by 0.5 percent.
The council also noted that changes in the release of tax refunds will affect revenues.
Earlier this year, Lingle had delayed all state income tax refunds from April until July to temporarily save $275 million and help the state get through the fiscal year.
When adjusted for the delay in state tax refunds, the council said, revenue in the fiscal year ending June 30 could climb by as much as 4 percent. That's because delaying tax refunds until after July adds to the state's revenue in the current fiscal year.
But Lingle said last week that she would release most of the tax refunds sooner because of improved revenue collections.
Moving the refund release date up reduces the forecast for revenue for fiscal year 2011, which begins July 1. The council forecast 8 percent growth, but adjusted it downward to 6.2 percent because of the change in tax refunds.
Either way, the 2011 forecast is higher than the 6 percent growth forecast by the council in March.
A 1 percentage point increase in the revenue forecast roughly translates to $40 million.