UPDATED 1/6/11 11:30 a.m.

The Hawaii Council on Revenues has downgraded its general fund revenue growth forecast for the current fiscal year to 11.5 percent.

The change represents a sharp drop from the group’s projected 14.5 percent growth in September1.

Not everyone on the council was satisfied with the projection.

After the meeting, council member Marilyn M. Niwao, state director of the Hawaii Association of Public Accountants, said she thought the downgraded projection is still “too optimistic.”

“Business are still hurting in economy … contractors are hurting,” Niwao said.
“There’s a lack of capital, banks are conservative loaning money, values of real estate is down.”

She said other council members are “just looking into the growth of visitor spending,” and added that they are not taking in account what she says are even worse economic conditions on the neighbor islands.

Rick Kahle, Council Chair, told Civil Beat he thinks Hawaii can reach 11 percent growth. He said the hotel industry is getting better, and other retail sales are good so the projection is achievable.

“This is consensus opinion,” he said. “We’re doing (the) best we can.”

In Hawaii, 1 percent of economic growth translates to roughly $45 million to $50 million in revenues.

State lawmakers were already prepared for the news. Senate Ways and Means Chair David Ige told Civil Beat last month that he felt the 14.5 percent forecast was overly rosy.

Gov. Neil Abercrombie’s administration, which had been banking on the 14.5 percent figure released the following statement:

“The core of our supplemental budget remains solid due in large part to the administration’s strong financial management practices and $85 million in savings that were realized over the last year. These new projections reflect the soundness of recapitalization of the Rainy Day and Hurricane Relief funds this year.”
“We will work with the Legislature as the supplemental budget session begins so that we continue to move forward on a positive track.”

The next Council on Revenues meeting is scheduled on March 5.

1. A previous version of this story incorrectly stated that the new forecast represents a 3 percent drop. The change of three percentage points represents a nearly 21 percent drop.