The state Council on Revenues on Tuesday predicted zero revenue growth for this fiscal year and reduced the growth projection for next fiscal year, a significantly downgraded forecast that could handcuff state lawmakers as they draft revisions to the state budget.

The council dropped the projection to zero growth for the fiscal year that ends in June, down from 3.3 percent growth in the forecast made in January, a $180 million loss of revenue for the state. The council lowered the projection to 5.5 percent growth for fiscal year 2015, down from 7.4 percent growth, an estimated $100 million loss.

Taken together, because the lower revenue this fiscal year reduces the base for next fiscal year, the new forecast leaves the state with $478 million less to spend through fiscal year 2015.

"The growth rate is starting to flatten. It’s becoming a lot more modest at this point," said Kurt Kawa­fu­chi, the council’s chairman.

State tax collections are down 1.1 percent through February, mostly due to a decline in visitor spending and — some economists suspect — the end of a federal payroll tax holiday last year, which influenced consumer spending. Council members did not think tax collections would improve enough over the remaining four months of the fiscal year to meet the higher forecast from January.

The downgraded forecast has both practical and political implications.

The House is expected to vote Wednesday on a $12.1 billion state budget for fiscal year 2015, $53 million less than Gov. Neil Abercrombie requested. The budget will then move to the Senate, where additional cuts to the governor’s request are now almost certain.

Abercrombie has based his re-election campaign on the state’s economic turnaround, including the record $844 million budget surplus posted at the end of the last fiscal year.

Sen. David Ige, chairman of the Senate Ways and Means Committee, who is challenging Abercrombie in the Democratic primary for governor, said the new forecast essentially means that the surplus has evaporated.

Without the changes made by the House, Abercrombie’s budget request — under the new forecast — would be out of balance in fiscal year 2015, according to House budget analysts.

Abercrombie said Tuesday that both his budget and six-year financial plan remain "solid and sound."

"Our budget and financial plan replenishes and builds state reserves, pays down unfunded liabilities and modernizes state technology," the governor said in a statement. "Hawaii’s economy is running at a sustainable level and contributing to the state’s strong fiscal condition. The administration looks forward to working together with the Legislature to continue to build reserves and fund necessary public services and key initiatives, while ensuring our long-term fiscal stability."

Kalbert Young, the state’s budget director, said the new forecast signals that revenue growth during the economic recovery may have peaked.

"If the COR forecast is accurate, tax revenue collections would be flat compared to last year," Young said in a statement. "However, as the council also recognized, there are a number of individual statistics in the larger universe of statewide economic data that suggests the overall state economy (and tax revenues) are at a peak level, and a decline from a peak — or, a judgment as to the ending of an economic cycle — is not yet clear."

Ige and Rep. Sylvia Luke (D, Punchbowl-Pauoa-Nuu­anu), chairwoman of the House Finance Committee, were criticized by some of their fellow lawmakers last year for taking too cautious an approach to the two-year state budget.

But the Council on Revenues has now twice lowered the forecast during this fiscal year, a downward trajectory that suggests Ige and Luke were prudent.

In making revisions to the budget this session, Luke presumed 1 percent revenue growth, which was less than the 3.3 percent the council had projected in January. After quickly calculating the impact of the new 0 percent growth projection, House budget analysts believe the House budget draft still balances, with only about $68 million to spare.

Luke said that "taking a very conservative approach to the budget helped us at least get to a positive as opposed to looking at a substantial negative number, which would be very difficult, and it would be unfair for us to throw that budget over to the Senate."

Ige (D, Pearl Harbor-Pearl City-Aiea), whose Senate Ways and Means Committee will prepare the Senate’s budget draft, said a lot of Abercrombie’s budget requests will likely not be funded.

Ige said the new forecast will "make it hard to look at most of the tax credits" that the governor and some lawmakers have recommended.

"This takes out almost a half a billion dollars out of the governor’s budget," Ige said, adding that "the surplus has evaporated."

Quarterly revenue forecasts by the Council on Revenues are intended as guides for the governor and Legislature when drafting the state budget. The council has been subject to criticism for forecasts that have missed the peaks of economic recoveries and the valleys during recessions.

The state’s record budget surplus, for example, was partly the result of council forecasts that underestimated revenue growth during the recovery.

The council is insulated from the policy and political debates at the state Capitol, but not divorced. After deliberations Tuesday that were often unfocused and esoteric, some on the council realized the magnitude of a forecast that takes nearly a half-billion dollars of state revenue off the table.

"I hope we’re wrong," Carl Bonham, a University of Hawaii-Manoa economist, told colleagues.