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Tuesday, June 4, 2013
CoR Releases General Fund Forecast
By News Release @ 1:04 AM :: 3591 Views :: Taxes

From Hawaii Council on Revenues

Dear Governor Abercrombie:    May 28, 2013

At its meeting on May 28, 2013, the Council on Revenues maintained its forecast for State General Fund tax revenue growth of 6.7% in FY 2013.  However, the Council increased the growth forecasts for FY 2014 and FY 2015 slightly; the forecast for FY 2014 increased from 7.3% to 8.0% and the forecast for FY 2015 increased from 6.8% to 7.0%.

The Council members did not think that they had new information since their last meeting to justify changing the forecast for FY 2013.   The upward revisions to the forecast for FY 2014 and FY 2015 were due mainly to expected increased activity in the construction  sector.  The Council left its  assessment  for  the  out  years  basically unchanged, but the way in which the forecast was specified resulted in a small technical change to the growth forecast for FY 2016, which went from 1.4% to 1.5%.

Revised  forecasts  of  State  General  Fund  tax  revenues  for  FY  2013  through FY 2019 are shown in the table below.  As in all multi-year forecasts, the estimates for the later years are subject to greater uncertainty.

Fiscal Year / General Fund Tax Revenues '000 / Growth From Previous Year

2013                                5,311,364                                6.7%

2014                                5,736,273                                8.0%

2015                                6,137,812                                7.0%

2016                                6,227,110                                1.5%

2017                                6,488,095                                4.2%

2018                                6,812,581                                5.0%

2019                                7,131,215                                4.7%

In producing its forecasts, the Council adopted specific adjustments recommended by the Department of Taxation reflecting effects on General Fund tax revenues of tax law changes enacted by the 2011 Legislature, including the following:

Act 97 (SB 570 SD2 HD1 CD1).  Part II repeals state tax deduction for taxpayers with Federal AGI  above $100,000 (for single taxpayers), $200,000 (for joint filers), and $150,000 (for heads of households).   Part III caps itemized deductions at $25,000 for a single taxpayer with Federal AGI of $100,000 and above; $50,000 for a joint filer with Federal AGI of $200,000 and  above;  and  $37,500  for  a  head  of  household  with  Federal  AGI  of $150,000 and above.   Parts II and III sunset on January 1, 2016.   Part IV delays the 10% increase in the standard deduction and the personal exemption by 2 years and makes them permanent.

Act 103 (SB 1186 SD2 HD1 CD1) establishes a temporary $10 minimum daily tax on each transient accommodation furnished at no charge.   The act also temporarily limits the TAT revenue distribution to the counties to $93 million per year, and limits the distribution to the Tourism Special Fund to $69 million per year.

Act 105 (SB 754 SD1 HD1 CD1) suspends certain GET exemptions and imposes tax at 4 percent on the previously exempt amounts for the period from July 1, 2011 to June 30, 2013.

The Department of Taxation has prepared a report for submission with this transmittal correspondence, detailing line-item forecasts for various components of the General Fund, reconciled to the Council’s forecast growth rate for total General Fund tax revenues.    The line-item  forecasts  include  components,  such  as  revenues  from  the General Excise Tax and from the Individual Income Tax, that the Council does not forecast separately.   Also, the Department of Budget and Finance has prepared the attached report to update its projections for change in non-tax and special tax revenues from its report in March 2013.

Please advise us if we can be of further assistance or if we can answer any questions.

Sincerely,

Richard F. Kahle, Jr.

Chair, Council on Revenues

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