GOVERNOR PLEASED WITH COUNCIL OF REVENUES FORECAST

From Office of Governor, Jan 3, 2013

HONOLULU –Gov. Neil Abercrombie today responded that the Council of Revenues forecast revisions for FY14 and FY15 are consistent with the Abercrombie Administration analysis of the overall economy. The tourism economic sector is performing strongly, state unemployment rates continue to decline, and other sectors like construction are showing signs of improvement.

“I am pleased the Council of Revenues is taking a long-term view of our economic future, which coincides with our financial plan –working responsibly toward a stable fiscal growth,” Governor Abercrombie said. “The budget proposal that we submitted to the Legislature is mindful of the revisions of the Council. The rate of revenue growth that they continue to forecast in the current year makes sense and is still very strong.”

The Council also recognized this administration’s efforts to clarify the renewable energy tax credits, thereby preserving a stable and responsible level of state revenue growth.

The administration is concerned that revenue and economic growth are projected to flatten beginning FY16, which will affect future fiscal bienniums and budgets. We will need to address the potential impact of remaining federal issues regarding debt ceilings and sequestration among others.

“The administration believes that the impact could be significant and that’s why we are making plans and working closely with the Legislature,” said Kalbert Young, director of the Budget and Finance Department. “This would include possible cost-saving measures and revenue enhancements such as making permanent certain tax provisions that are due to sunset in 2015 and beyond.”

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CB: Inouye Cliff Bigger than Fiscal Cliff? 

"The Inouye Cliff is actually going to be a greater impact I believe than even the federal cliff," said Kalbert Young, the state's chief budget officer.

Hawaii receives $2 billion — nearly one-fifth of its annual budget — in federal funding each year for state programs. That covers everything from watershed protection and highways, to rail and University of Hawaii telescopes.

But how much of that came to Hawaii because of Inouye is impossible to tell, Young said.

"The stuff Inouye was able to do is far beyond quantifying," he said. "It's like trying to figure out which way the wind is going to blow tomorrow. It's difficult."

"We literally have to live through it and you'll find out which organizations (are affected)," he said.

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SA: Abercrombie to use Inouye Death to Push Tax Hikes

Economists are concerned, however, about the financial impact of the state’s renewable energy tax credits, the debate over federal spending and debt reduction in Washington, D.C., and the potential loss of federal money because of the death of U.S. Sen. Daniel Inouye, D-Hawaii, the former chairman of the Senate Appropriations Committee.