The state Council on Revenues this afternoon downgraded its forecast for state revenue growth this fiscal year and substantially dropped it for next fiscal year because of the slowing economy.

The council reduced its estimate for this fiscal year to 3.3 percent, down from 3.9 percent in March, which means about $27 million in less revenue for the state.

The estimate for next fiscal year was reduced to 2.0 percent, down from 4.1 percent, which means, because of the lower base from this fiscal year, a $128 million revenue loss.

The revised forecast for this fiscal year, which ends in June, does not fully capture the impact of the shutdown of Aloha Airlines and Molokai Ranch and other setbacks in the state's economy. The council, in a divided 3-2 vote, was split on whether the forecast for this fiscal year should actually be lower.

The full impact of the job losses and decline in visitor arrivals are likely to be felt during the next few months and will contribute to the expected slower start to the next fiscal year, according to Paul Brewbaker, a Bank of Hawaii economist who is the council's chairman.

Revenue growth, however, is expected to rebound somewhat during the second half of next fiscal year.

The revenue loss will have an influence on state spending and may persuade Gov. Linda Lingle to withhold some of the money approved by state lawmakers for state programs next fiscal year. The governor and state lawmakers use the council's forecasts when drafting the state budget and financial plan.

"The tough decisions just got tougher," said state Rep. Marcus Oshiro, D-39th (Wahiawa), the chairman of the House Finance Committee.