Gov. David Ige’s administration and state lawmakers have a little more money to work with as they develop the next biennium budget for the state in the coming months.
The Hawaii Council on Revenues decided Tuesday to increase its revenue forecast for the current fiscal year, which started July 1. Its previous projection of a 3.5 percent increase in revenue was raised to 4.5 percent, which translates to roughly $53.7 million in additional revenues for the general fund.
That brings the estimated general fund collection for 2015 up to $5.61 billion. But the slightly rosier economic picture for this year doesn’t come close to pulling the state out of deficit-spending mode.
Hawaii Council on Revenues Chair Kurt Kawafuchi listens to the discussion Tuesday.
Cory Lum/Civil Beat
The council kept its earlier forecast for the next six years intact at 5.5 percent growth, which would give the state $116.5 million more for the next biennium budget.
The eight-member council, chaired by Kurt Kawafuchi, didn’t necessarily agree on everything that was motivating the changes in the economy, but after hashing it out for an hour eventually found common ground on the growth forecast.
Council member Carl Bonham, executive director of the University of Hawaii Economic Research Organization, said his models showed higher growth this year, as much as 7 percent. He believes falling oil prices, which can lead to more tourists visiting Hawaii, will play a large role in the economic growth.
Council Vice Chair Marilyn Niwao was more conservative and spurred the council to only increase the forecast 1 percent. She noted her concerns over the state being able to collect all the general excise and transient accommodations taxes from tourists staying in vacation rentals managed by people living on the mainland who may be unaware of Hawaii tax laws.
“We’re a little bit cautious because there’s uncertainty in the rest of the world,” Kawafuchi said after the meeting.
Hawaii Council on Revenues member Carl Bonham makes a point during the meeting.
The U.S. economy is relatively strong, but Japan and Europe are still in a recession, he said.
The council had downgraded its forecast for 2015 to 3.5 percent growth at its last quarterly meeting in September, marking the fifth time in a row it had downgraded the projections.
Ige has proposed a $6.48 billion general fund spending plan for 2016, a 4.7 percent increase over current levels, and a $6.8 billion budget for 2017, a 9.9 percent increase. His biennium budget proposal was relatively unchanged from what Gov. Neil Abercrombie’s administration left him.
Ige, who took office Dec. 1, has said he plans to make specific budget requests to the Legislature, which convenes Jan. 21.
Many government agencies and outside groups will be fighting for their share of state money over the next few months as the budget is finalized.
The Hawaii Health Connector, the state’s health insurance exchange, released a report Monday saying it needs $28 million over the next seven years to become self-sustaining.
University of Hawaii officials told House lawmakers last month that they need an extra $74 million for operating costs and $400 million in capital improvements.
Ige’s budget proposal relies heavily on the state’s record $844 million carryover balance from 2014. Last year, when Ige headed the Senate money committee, the state used $179.2 million from its surplus.
The trend of the state spending more money than it’s taking in is expected to continue through 2018, draining the carryover down to $35.8 million before it’s projected to rise again, according to the state’s multi-year financial plan.
REPORTING ON HAWAII’S BIGGEST ISSUES
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