Council on Revenues Lowers Tax Revenue Forecast
At its meeting on September 6, 2012 the Council on Revenues lowered its forecast for State of Hawaii’s general fund tax revenue growth in fiscal year (FY) 2013 from 5.3% to 4.9%.
The Council also lowered its revenue growth forecast for FY 2014 from 4.0% to 3.9%. The growth rates for FY 2015 through FY 2019 were revised slightly downward as well.
The Council is now forecasting revenue growth of 5.0% in 2015, 1.2% in 2016, 4.2% in 2017, 5.1% in 2018, and 4.6% in 2019.
“The declines in the forecasts for tax revenue growth in FY’s 2013 and 2014 were mostly due to a reassessment of the cost of the renewable energy tax credits,” explained Richard Kahle, the chair of the Council on Revenues, in a written letter from the Council on Revenues.
According to a new estimate by the Department of Business, Economic Development & Tourism (DBEDT), the tax credit is predicted to grow from $34.4 million in tax year 2010 to $82.9 million in tax year 2011 and to $173.8 million in tax year 2012. DBEDT also provided a range of forecasts for tax year 2013.
“Accordingly, the Council assumed the cost of the credit will be $90 million higher in FY2013 than it was in FY2012, that it will be $150 million higher in FY 2014 than it was in FY2012, and that it will be higher than FY2012 in each of FY’s 2015 through 2019 by $170 million,” continued Kahle.
The Council also believes that there is much uncertainty about the economies in Europe and is concerned that events there could have important effects on the economies of the United States and Hawaii. The Council also expressed uncertainty about the future of the Honolulu rail project and its effect on the construction industry.