LAYOFFS LOOMING: STATE REVENUES LOWER THAN PROJECTEDJuly 9, 2009, 9:06 AM HST · Updated July 9, 9:12 AM 0 Comments
An updated assessment of tax revenues shows the state lost an additional $57 million in FY09-worse than the 9 percent decline projected by the Council on Revenues.Â
Governor Linda Lingle said she will have to make “tough, realistic decisions to close the budget shortfall.”Â She did not specify how many workers would be laid off, but initially indicated there may be as many as 2,500 layoffs if furloughs are not approved.Â Her plan to layoff state workers for three days each month for two years was struck down by Circuit Judge Karl Sakamoto last week based on constitutional reasoning.Â
Final tax revenues for fiscal year 2009, showed general fund revenue collections decreased by $436.1 million or 9.4 percent compared to fiscal year 2008.
The final tax collections represent $56.7 million in additional general fund revenue loss compared to what the Council on Revenues had projected for the fiscal year that ended on June 30, 2009 when it last met on May 28. Â The additional revenue loss means the state is now facing a budget shortfall in excess of $786 million through June 30, 2011.
This past fiscal year, Declared Estimated Taxes dropped significantly to $262.5 million, a 39 percent fall from last fiscal year. Â In a press release issued yesterday, the governor’s office said this was an indicator that Hawai’i residents are projecting their current and future incomes to be significantly less. Â
Another trend is the drop in Withholdings on Taxes and Wages, which saw a decline in the last month of the fiscal year. Â Whereas monthly Withholding on Taxes and Wages ranged from $118 million in January 2009 to $106 million in May 2009, this number dropped to $77.8 million in June 2009. Â The decline is being attributed to decreases in wages and increases in unemployment. Â
“The additional revenue loss as well as these two worrisome trends show that our economy is continuing to weaken,” said Governor Linda Lingle. Â “It is imperative that we all work together to continue to make tough, realistic decisions to close the budget shortfall and remain focused on growing our economy for the long-term,” Lingle said.
(Posted by Wendy Osher Â© 2009; Information provided by the Office of the Governor)