The Council on Revenues has upgraded its forecast for the current fiscal year, citing an improving economy led by Hawaii’s rebounding visitor industry.

The council at its Wednesday meeting improved its outlook to 12 percent growth from 11.5 percent over last year’s general fund tax collections. The half-percentage point gives Hawaii lawmakers a more than $20 million cushion for the current year as the Legislature finalizes the state budget.

“We generally think the economy is improving,” said University of Hawaii economist Carl Bonham, who serves on the council. He cited a “booming” visitor industry along with continued expansion for the rest of the economy, an improving job market and higher consumer confidence.

Visitor spending in the islands reached record highs last month.

The forecast also accounts for tax increases that lawmakers approved last year.

The rosier projection for fiscal 2012 is still, however, lower than the 14.5 percent growth that Gov. Neil Abercrombie used to draw up his proposed budget plan.

The council also improved its revenue prediction for fiscal 2013 to 7.5 percent year-over-growth from 6.5 percent, and raised its 2014 and 2015 forecasts as well.

Bonham said the improvements assume the Honolulu rail project moves ahead as planned, stimulating the economy and creating jobs. He said the economy may not grow as quickly without rail.

The members were not entirely optimistic in their deliberations. Members cited uncertainty with Europe’s economy, the rising cost of oil and the possibility of a war with Iran, among other factors that could negatively impact the state’s revenue picture.

Fiscal Year Forecasted Growth
2012 12 percent
2013 7.5 percent
2014 4 percent
2015 6.2 percent
2016 4 percent
2017 5 percent
2018 5 percent

The group will next convene May 29 to meet its June 1 reporting deadline.

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