The state’s recently downgraded revenues forecast won’t scrap Gov. Neil Abercrombie‘s financial plan for this year or next.
That’s the assurance state Budget Director Kalbert Young gave lawmakers Monday at a budget briefing in the Capitol’s auditorium.
The governor just three weeks ago had proposed a bigger operating budget for the upcoming 2013 fiscal year, promising no new tax hikes to pay for it.
Abercrombie’s plan was based on a more optimistic forecast by the Council on Revenues, which last week lowered its projection to 11.5 percent growth from 14.5 percent.
Young told members of the House Finance and Senate Ways and Means committees that the lower forecast of general fund revenues would put state finances in the red beginning in fiscal 2014. He said he feels the 2012-2013 biennium spending plan is “adequately proposed.”
“Because the impact is really into a future biennium and not in the current, we can be a little more thoughtful and overall more strategic in terms of what options are available,” he said. “The administration is actively developing and reviewing a comprehensive strategy to rebalance the financial plan.”
Young said the updated plan would likely be ready in the next couple of weeks. Meanwhile, the legislative session convenes Jan. 18, when lawmakers will take their turn at crafting a fiscal 2013 budget.
Under the rosier forecast, Abercrombie’s plan would have seen sizable surpluses at the end of each fiscal year. If the Council on Revenues forecast — which by law has to be considered by the governor and lawmakers in determining state expenditures — pans out, the state would end fiscal 2013 with a $19 million deficit.
The deficit would grow significantly in following years, according to data from Young:
Carry-Over Deficit, in Millions
Most lawmakers didn’t seem very anxious about the downgraded revenue forecast. House Finance Chairman Marcus Oshiro told Young he looks forward to receiving the administration’s updated budget plan.
Rep. Barbara Marumoto, however, was visibly bothered by the projected deficits and asked if the governor was planning to introduce any tax increases during the upcoming session.
Young told her not until next year.
“I would say that in the current biennium, there still is no need for tax increases or revenue enhancements to satisfy the fiscal budget for this current biennium,” Young said. “The implications for the next biennium and the one after are quite considerable and severe that revenue enhancements should at least be reviewed.”
Lawmakers also heard from top local economists, who mostly agreed that Hawaii’s recovery in 2012 would be gradual. They did note that tourism numbers are looking healthy, but said the state’s jobs market is expected to be flat, and they don’t expect much activity in the construction industry.
Stay Up To Date On The Coronavirus And Other Hawaii Issues