State facing budget crunch

LIHUE — State legislators will have to work with a smaller budget than had been anticipated just two days ago.

The Council on Revenues lowered its state general fund forecast by .8 percent Wednesday, retreating from a 5 percent growth projection in September to 4.2 percent. The nearly 1 percent decrease corresponds to $54 million in government funding, a figure that represents a significant portion of the state’s discretionary budget.

The revenue council makes quarterly projections for the general fund that are used by government officials when they put together the state’s annual budget. Gov. David Ige based his executive budget in part on the previous quarter’s forecast, and this most recent forecast will be used by the Legislature in planning for appropriations during the upcoming legislative session, which begins next week.

Senate President Ron Kouchi said Thursday legislators will be faced with some difficult decisions when deciding where to make cuts. Some education and homeless aid programs are likely to see reduced funding next year, Kouchi said. He mentioned specifically the Hawaii Promise Program, which provides financial aids to economically disadvantaged college students.

Council on Revenues Chair Kurt Kawafuchi said Thursday the decision to reduce the growth forecast was not a unanimous one. According to Kawafuchi, the vote was 4-1, with council member Christopher Grandy voting against and making an argument for a growth increase of nearly 2 percent.

Kawafuchi explained the basis for the council’s reasoning during an interview that took place while he prepared a report of the forecast for Ige.

“There’s a lot of uncertainty right now,” Kawafuchi said, pointing to global forces that could contribute to a slowing economy — stock market volatility, a trade dispute between the U.S. and China, and ongoing geopolitical upheaval. Although the revenue council is proceeding cautiously, the news is not all bad.

“We think the economy is still growing,” Kawafuchi said. “But that growth is slowing.”

The revenue council’s growth forecast is based on a number of factors related to the economy as a whole. Here’s how it works in relatively simple terms.

The vast majority of government revenue comes from general excise and non-corporate income taxes, both of which fluctuate depending on economic conditions.

For instance, when unemployment rates are low — as is the case currently in Hawaii — a greater percentage of people income taxes, and analysts can reasonably assume the state’s general fund, will grow. Or if the economy is good, consumers spend more, driving up GET revenue.

But those examples are only two among many that can potentially influence revenue growth. Attempting to predict the future of the general excise tax — the single largest revenue stream for the government — can be a very complicated proposition. Because the GET applies to virtually all commercial transactions, it can be affected by a wide range of forces within the economic environment.

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Caleb Loehrer, staff writer, can be reached at 245-0441 or cloehrer@thegardenisland.com.

7 Comments
  1. behappy January 11, 2019 4:29 am Reply

    How about cutting the 200 Million Dollar Budget for tourism? Our islands are experiencing overtourism.


  2. I saw a Vampire once January 11, 2019 11:11 am Reply

    Are you sure the county council know what is .8%? .008 is the number you would use.


  3. I saw a Vampire once January 11, 2019 11:32 am Reply

    6,750,000,000 is the number i came up with. About


  4. I saw a Vampire once January 11, 2019 1:30 pm Reply

    $6,750,000,000 is the 5% number. Reduction is $54,000,000. .8% is the reduction. Did you guys place it in for me. The problem is solved. $6,696,000,000 dollars. Did you get it?


  5. I saw a Vampire once January 11, 2019 1:35 pm Reply

    I just would like to point out that some of your county councilmen flunked high school. Or did not take college. I and a host of other bloggers would like to point it out here too.


  6. I saw a Vampire once January 11, 2019 2:14 pm Reply

    I got you. Dumbo. I’m smarter than you in that tuck. County Councilmen.


  7. harry oyama January 11, 2019 7:25 pm Reply

    How about taxpayers not paying for State and City employees who are sued $1million like that KPD officer who ran over that injured driver speeding over 80 mph? It should be coming out of their pockets not ours.

    And how about the hundreds of $millions taxpayers paid to Rail contractors when Honolulu City officials pre arranged approvals before environmental analysis was done and the more than $1.4 million dollar contract of DOE corrupt Waipahu principle awardingsole permission for his own son’s company for a bell system at Waipahu High School replacing one that still works? He shouldn’t be getting a full for pension and medical coverage for those crimes but did.

    The savings on these issues along is more than enough to balance any short fall. Then of course you have us taxpayers footing the $1.2 annual medical expenses for migrants from Micronesia


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