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Friday, August 1, 2014
$72M Vanishes: New Council on Revenues Forecast Minus 1.8%
By News Release @ 3:54 PM :: 7210 Views :: Economy, Taxes

2014 April GET collections still down compared to 2013 collections

News Release from Office of Sen Sam Slom

Honolulu – August 1, 2014 — Senator Sam Slom continues to urge spending restraints because of the slow recovery of the state and national economies.

The 2014 April General Excise Tax (GET) collections are still down compared to the same month last year, although slightly improved on March 2014.

GET collection comparison table [1]

2013

2014

Difference

% Difference

Jan

265,379,903

263,591,285

-1,788,618

-0.67%

Feb

250,035,265

254,192,944

4,157,679

1.66%

Mar

242,507,764

228,939,599

-13,568,165

-5.59%

April

257,884,868

257,145,296

-739,572

-0.29%

The USA national Gross Domestic Product (GDP) numbers for Quarter 2 are up 4% in comparison to Quarter 1[2], although on an annual basis the GDP numbers for 2014 are relatively low at around 1.1%.

Senator Slom explains:

"For the short term, it indicates that both the state and national economies are somewhat improving, however, the improvement is only on a quarter-to-quarter basis. This does support that there is only a very slow recovery going on for Hawaii and the nation. Hawaii needs to be frugal in its spending of taxpayers' monies, as the economy is very fragile at this moment, and both the state and the nation are cash poor."

"To ride this slow ride out of recession, Hawaii needs to put away some cash reserves, just like our everyday families do. At this time, as the Hawaii Senate Minority has previously indicated, Hawaii is due run out of cash reserves somewhere between 2017-19 if no significant changes are made in cutting costs (or raising revenue), possibly resulting in a constitutional crisis of the unbalancing of Hawaii's budget."

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[1] http://files.hawaii.gov/tax/stats/monthly/201404ge.pdf

[2] http://bea.gov/newsreleases/national/GDP/GDPnewsrelease.htm

  *   *   *   *   *

POLITICAL RADAR: The state Council on Revenues on Thursday downgraded the state's revenue forecast for the fiscal year that ended in June based on actual tax collections.

The new fiscal year 2014 forecast is minus 1.8 percent, down from a negative 0.4 percent in May, a difference of about $72 million.

The Abercrombie administration has been touting a $664.8 million budget surplus at the end of the fiscal year, but tax collections were off as the state's economic recovery slowed.

read ... -1.8%

  *   *   *   *   *

STATEMENT FROM THE GOVERNOR AND FINANCE DIRECTOR ON REVISED COUNCIL ON REVENUES FORECAST

News Release from Office of the Governor July 31, 2014

HONOLULU – Gov. Neil Abercrombie and Finance Director Kalbert Young today commented on the adjusted forecast from the state Council on Revenues.

Gov. Abercrombie stated:

“The outcome of today’s meeting is another reason for us to remain optimistic about Hawaii’s strong and vibrant economy.

“Due to sound fiscal management, our financial house continues to be on a solid foundation, with the state concluding fiscal year 2014 with a $664.8 million ending balance, even after contributing $55.5 million to our state reserves via the Hawaii Hurricane Relief Fund and setting aside $100 million for the state’s unfunded liability for retiree health care benefits.

“Hawaii’s economy is running at a sustainable level and regardless of short-term revenue cycles, we are focused on long-term fiscal stability.”

Finance Director Young added the perspective:

“As finance director, my approach is to manage the budget and financial condition across multiple fiscal years. As a result, near-term revenue forecasts are evaluated and incorporated into the state’s six-year plan.

“As in the past, the state’s financial management team is prepared to exert measured controls of the state’s budget to ensure that programs are sustainable through any economic cycle. You will continue to see that exhibited in fiscal year 2015.

“While the fiscal year 2014 revenue collection is down 1.8 percent compared to fiscal year 2013, revenue growth over a five-year period from fiscal year 2009 to fiscal year 2014, has been substantial – about 21.7 percent. The Council’s forecast shows revenue and economic growth of at least five percent a year for the next five years.”

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