Lower-than-projected tax collections will force the state to move cautiously with its spending over the next fiscal year, but state officials said there should be no immediate effect on programs and services the state provides to its citizens.

The state budget was based on a 6 percent growth projection by the Council on Revenues back in March, but actual tax revenue collected in the last fiscal year was only 3.4 percent more than the previous year, a difference of about $110 million to $115 million.

House Majority members yesterday acknowledged their fiscal plan was based on higher projections. But they said they anticipated the slowdown in growth and used the diminished newer revenue figures to validate some of their clashes with Gov. Linda Lingle over the magnitude of tax relief and the use of the highway fund for crosswalk improvements.

"I think we've been proven correct in our approach. I think that's always the way to be dealing with taxpayer dollars, that we want to do something that we can really follow through in the out years," House Majority Leader Kirk Caldwell said.

House Speaker Calvin Say said the priority now should be on stimulating economic growth. "I'm not here to squabble about anything in the present, but let's move forward to see that this economy rebounds in a very positive and optimistic view," he said.

But Ted Liu, director of the Department of Business, Economic Development and Tourism, said the state is in good shape, with continuous job growth, low unemployment and increased personal spending. "We have the type of economy many states would like to have," he said. "Based on numbers, based on performance, we have a very healthy economy."

Although Say said he expects budget restrictions to take place because of lower revenue, state Budget and Finance Director Georgina Kawamura said that is not the case, at least in the first quarter.

"There's not going to be a shortfall," she said. "If you're a member of the general public, nothing will change for you."

Nevertheless, with the economic slowdown, the administration has warned departments that they will only receive their first quarter's budget allocations this month and will have to justify future spending.

"We're in a cautious mood," Kawamura said.

Kurt Kawafuchi, director of the state Department of Taxation, noted that there were other reasons for the reduced revenue collection, including the fact that the last weekend of the fiscal year was not included in the statement. The weekend of June 30 would have added an additional $40 million to total collections.

"The general excise tax has traditionally been a good indicator of the economy, and there is increase by 8.5 percent and that's despite missing the weekend," he said.

Liu said talking about a slowdown in the economy was dangerous. "Economists recognize that there is a psychology of an economy," he said. "If you start jawboning people down by saying the economy is in the tubes, that has the potential of creating a type of behavior that is self-fulfilling, and we should be careful about that."

Reach Treena Shapiro at tshapiro@honoluluadvertiser.com.