The Hawaii Council on Revenues on Thursday upped the amount of money expected to flow into the state’s coffers this year, but only by a bit.

For fiscal year 2016, which runs until June 30, the general fund revenue forecast was boosted from a growth rate of 6 percent to 6.7 percent.

That translates into about $40 million for the state budget — not a whole lot of cash, said Rep. Sylvia Luke, the Democrat who chairs the House Finance Committee at the Hawaii Legislature.

“In the big scheme of things, that doesn’t really amount to that much, and so it doesn’t really mean that much,” Luke said. “We have still got to remember that spending a substantial amount more than we are taking in is a concern — that our expenditures are over our revenues. Forty-million dollars doesn’t help to balance our trend of spending more than we take in.”

The Council on Revenues met Thursday at the No. 1 Capitol District Building to up its current forecast.
Members of the Council on Revenues meet Thursday to revise the state’s revenue forecast. Chad Blair/Ciivl Beat

Sen. Jill Tokuda, the Democrat who chairs Ways and Means, agreed.

“Obviously, up is better than down, that’s always a good thing,” she said. “But this is very minimal in terms of any real impact and doesn’t get us out of the woods in future bienniums.”

While the extra money could help Gov. David Ige in terms of easing up on budgetary restrictions on various departments, Tokuda said the money does not “give us a whole lot of breathing room” when it comes to collective bargaining costs, deferred maintenance and paying down health benefits to government workers and retirees.

“This is very minimal in terms of any real impact and doesn’t get us out of the woods in future bienniums.” — Sen. Jill Tokuda

The Ige administration said it welcomed the rise in the general fund.

The Council on Revenue’s modest increase indicates continued favorable economic conditions at this time,” a spokeswoman said. “We remain cautious as these conditions cannot be taken for granted. There are many pressing needs and the administration will maintain its focus on ensuring the state’s fiscal stability.”

The Council on Revenues, which is attached to the state Department of Taxation, is tasked with preparing revenue estimates for each fiscal year of the state’s six-year state program and financial plan. The estimates are used by the governor and Legislature in preparing the state budget.

In December, Ige unveiled a $13.7 billion overall budget for fiscal year 2017, which starts July 1. Of that, $7.7 billion would come from the state general fund, the rest from the federal government and other sources.

At the time, Ige said his top priority was to make sure the state’s finances were in order and that it live within its means. The governor’s proposed budget actually calls for spending that exceeds revenue, but it’s balanced by an carryover surplus of $828 million.

Earlier this week, Luke and Tokuda expressed frustration with Ige’s budget and finance director, Wes Machida, for not having more specific details regarding the budget.

The budget for the current year is $12.8 billion, of which $6.8 billion comes from general funds.

Tourism, Construction Healthy

The Council on Revenues — a seven-member board comprised of economists, accountants and business people — did not adjust its general fund growth projections for future years: 5.5 percent for 2017 and 2018, and 4.5 percent for 2020 to 2022.

In reaching its projections Thursday, council members factored an additional $39 million into the general fund from a Hawaii Supreme Court ruling last year on general excise taxes, penalties and interest from online travel companies from 2001 to 2011.

An additional $10 million to $15 million is expected from the settlement in the current fiscal year, in addition to an unspecified amount of money that is being calculated for the years 2012-2014.

Other considerations were steady numbers in air travel to the islands and spending from tourists; no significant change in currency exchange rates for Japan, Australia and Canada — key tourism markets for Hawaii; a healthy local construction industry; new openings in retail; and the green light of the Hoopili housing project in West Oahu and so-called “ohana” housing units for residential properties.

Down the road, the gradual modernization of the state’s taxation system is also expected to result in a steady, reliable cash flow for the state — possibly helping council members adjust their forecasts again.

The council will meet again March 10, in advance of its scheduled forecast March 15. That’s the day before a key budget deadline at the Legislature.

The House and Senate money committees will wrap up briefings of budget requests from administration departments next week.

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