The state Council on Revenues says the state is still on track to hit $7.4 billion in general fund tax revenues by June 30, the end of the fiscal year.
The panel of accountants, economists and tax experts made no changes to tax projections this year but slightly raised their projection of growth in tax revenues for next fiscal year by 1%, which means lawmakers could have an extra $80 million to fund budget requests for 2021.
“It’s not a strong forecast. It’s relatively anemic,” council member Kristi Maynard said shortly before the council voted unanimously on the projections.
State legislators consider the council’s projections when planning the budget. But with steady growth for the last half of this fiscal year and a moderate increase in coming years they may not alter how the Legislature evaluates budget requests this session, which opens Wednesday.
“We still have to see what bills come in and what the Legislature wants to pursue,” Sen. Donovan Dela Cruz, chair of the Ways and Means Committee, said Thursday afternoon.
The council pushed back a projected slowdown in tax growth by a year to 2022, when growth could shrink to 3%. Same goes for 2023, but the projections are expected to rise again to 4% in 2024 and onward.
Dela Cruz said that could help lawmakers further down the road, but for the immediate future, not much changes.
The panel is expected to make another prediction on tax growth in March, the middle of the legislative session.
Uncertainties like war with Iran or a trade war with China seem to be over for the moment. And barring all-out war or natural disasters, the projection should hold through the rest of this fiscal year.
Carl Bonham, executive director of the University of Hawaii Economic Research Organization, said he disagreed with a state economist’s outlook on the construction industry slowing. He said that with excitement over projects like the renovated Blaisdell Center, a new Aloha Stadium and others, the industry should be stable.
“It’s not a big plus, but it’s not a big negative,” he said.
Last year, tax forecasts dipped in March, putting in jeopardy some big-dollar items from state departments.
While the panel noted a strong start to this fiscal year, which began July 1, they warned that the money flowing in may have been inflated by late tax collections and the revenue would eventually level out.
In the first six months of this fiscal year, the state brought in 6.1% more taxes than in the same period last fiscal year, according to the Department of Taxation.
But the strong growth this year isn’t expected to last. When deciding on projections for the coming fiscal years, the council still considered a looming recession, the presidential election and general turmoil in international politics.
Last March, numbers dipped slightly, causing a restructuring of budget priorities in the Legislature. Fears that money wouldn’t come in were relieved last May when taxes on the most wealthy residents in Hawaii gave tax collections a slight bump.
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