State economists Thursday raised Hawaii’s revenue forecast for this fiscal year, which began in July, projecting that lawmakers will have $150 million more in the general fund to operate government services than what was previously expected.
In May the Council on Revenues had projected that state revenues for the 2016 fiscal year would grow by only 2.7 percent because $104 million in state tax refunds that were supposed to be paid out in 2015 would instead be paid out this year.
The Department of Taxation had predicted delays in tax refunds due to new processing procedures put in place to prevent tax fraud.
However, this turned out to not be the case, prompting the council to revise its projection to 6 percent revenue growth for the 2016 fiscal year.
The council of seven economists made slight changes to its projections through 2021 while maintaining its contention that there would be continued strong economic growth in future years.
For the 2017 and 2018 fiscal years, the economists are projecting a 5.5 percent growth rate. This is a slight downgrade for the 2017 fiscal year — the council in May had projected growth of 6.4 percent.
The council is projecting a 5 percent growth rate for 2019 and 4.5 percent growth rates in 2020 and 2021.
Council members expect continued growth in construction, particularly on Maui and Hawaii island, and that Hawaii’s visitor numbers and spending would continue to climb.
Council member Carl Bonham, professor of economics at the University of Hawaii at Manoa, said he thought this year’s projection of 6 percent growth was conservative. However, international factors, such as a slowdown in the Chinese economy and losses in the stock market, prompted council members to temper their projections.
“The underlying story is pretty strong economic growth,” Bonham said. “(But) obviously there are lots of concerns about what is happening in the rest of the world and how that will work its way through to influence tourism and federal spending.”
State Rep. Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu), House Finance Committee chairwoman, said she had been concerned when the council downgraded its revenue forecast to 2.7 percent growth in May. The latest projections are in line with the Finance Committee’s projections for the next six years, she said.
“So this doesn’t really change things, even if it looks like a drastic change,” she said.
