Prompted by Gov. Linda Lingle, the state Council on Revenues yesterday agreed to lower its growth forecast for the fiscal year, a move that may lead to another round of restrictions on state spending.

The council reduced its forecast to 1 percent, down from its 2 percent prediction from May, which means the loss of $46.4 million in anticipated state revenue.

The council also dropped the forecast to 4 percent for fiscal year 2010, down from 4.3 percent, about a $16 million loss that will come on top of the lower base from this fiscal year, which runs through June 2009.

Lingle asked the council to reconsider its May forecast because of the slowdown in the economy and the fact that the fiscal year closed last month with 1.2 percent revenue growth, well short of the 3.3 percent the council had just predicted in May.

The council had not been scheduled to issue another forecast until September. It was the first time the council adjusted a forecast outside of its regular schedule since then-Gov. Ben Cayetano asked the council to move up a forecast during the economic downturn after the Sept. 11, 2001, terrorist attacks.

"The way we looked at it is, it's better to get the news now, because in September we'll be right in the midst of budget prep," said Georgina Kawamura, the state budget director. "Now, we can plan for that budget prep accordingly."

Kawamura said it is too soon to say whether the new forecast will lead to further state spending cuts. In June, Lingle ordered 4 percent across-the-board restrictions on state departments and agencies and also asked the state Legislature, the Judiciary and the state Office of Hawaiian Affairs to share in the fiscal restraint.

Paul Brewbaker, a Bank of Hawaii economist and the council's chairman, said the lower forecast is related to the sharp decline in visitor arrivals that has hurt tourism spending since the shutdown of Aloha and ATA airlines during the spring, as well as a broader change in consumer behavior as people try to reduce their personal spending.

Brewbaker said economists did not anticipate as large a decrease in revenue collections during the last few months of the 2008 fiscal year. But he said he was criticized by some for saying a few months ago that the decline looked similar to what had happened after 9/11.

Visitor arrivals dropped 14.2 percent in June, the largest since January 2002. Brewbaker said that, while similar, the growth picture in total is not yet as bad as after the terrorist attacks.

"It's a significant compression in tourism that seems to be dragging on now," Brewbaker said.

State Sen. Rosalyn Baker, D-5th (W. Maui, S. Maui), the chairwoman of the Senate Ways and Means Committee, said she hopes the Lingle administration releases some of the capital improvement money lawmakers approved for public schools and other state projects to help with growth in the construction sector.

"It's not surprising," she said of the new forecast. "It means that we're going to have our work cut out for us in trying to improve our visitor numbers and working with the businesses that are actually bringing revenue into the state."

State Rep. Marilyn Lee, D-38th (Mililani, Mililani Mauka), the vice chairwoman of the House Finance Committee, said next session will be difficult as lawmakers evaluate state spending.

"We're going to have to work hard to make sure our state progresses forward now that our revenues have decreased," she said. "Everyone will probably have to make sacrifices."

The state has a $10.7 billion budget this fiscal year, with about half — $5.3 billion — in general-fund spending that is most closely connected to revenue collections.