Taxes and the Economy

The forecast for economic health in the Islands is not as rosy as it has been in the past few years.  In January, the state Council on Revenues revised its forecast for the current fiscal year to a 4.9 percent increase, down from 5.7 percent predicted in August 2006.  This forecast comes after two consecutive years of over 5% surplus in the general fund (where the general fund balance exceeds 5% of general fund revenues for two successive fiscal years).

The actual general fund revenue intake was even less than the January forecast.  The Department of Taxation reports general fund deposit increases of 3.8%, which is even less than the Council on Revenues growth projection of 4.9%.  One percentage point is equal to about $45 million in state revenue, meaning lawmakers have about that much less to work with as they craft the supplemental budget for the 2009 fiscal year.   This means less money for government to fund its citizens' needs. 

This softening of the economy does not come as a surprise as we have seen reduced tourism numbers and a slowdown in home sales, in part due to the nationwide sub-prime mortgage crisis.

Renewable Energy Technology may be our hope for better economic outlooks in the future.  This newer field of technology could increase jobs for Hawaii's people.  Alternative energy projects have the potential to create an entirely new arena of job opportunities.  We as a community need to recognize the potential of this emerging renewable energy arena.  Further, as an economic base, it will move us towards a technologically based economy away from the real estate and tourist based economic dependence of the last century. 

Representative Cynthia Thielen • State Capitol, Room 443 • 415 South Beretania Street • Honolulu, Hawaii 96813 • Phone: (808) 586-6480