HONOLULU (HawaiiNewsNow) - The chairman of the Council on Revenues says the effects of the earthquake, tsunami and nuclear power plant crisis could materially affect Hawaii tax revenues, a development that would exacerbate the state budget shortfall.
Hawaii's constitution requires that the state budget be designed to balance, and the Council on Revenues, including economists from government, academe and the private sector, is the body that does the official revenue forecast on which the budget is based.
In its most recent forecast March 10, it lowered its estimated tax revenue growth for the current fiscal year from 3 percent to half a percent. The current fiscal year ends June 30. For the next fiscal year it raised its growth estimate from 10 percent to 11 percent.
In a letter this week to Gov. Neil Abercrombie, the chairman of the council cites the events of recent days as "a reminder" that external economic shocks can "quickly change outcomes significantly" from forecasts.
"History teaches us not to overreact in the immediate aftermath of such shocks," Paul Brewbaker wrote, but added, "external shocks to Hawaii altered the forecast in recent decades."
He cited 9/11, Desert Storm, SARS, the 1995 Kobe earthquake and the 2009 swine flu scare.
Events such as these, Brewbaker wrote, "can have materially adverse consequences for the Hawaii economy."
Brewbaker told HawaiiNewsNow that the members of the Council on Revenues hope to convene in coming weeks to consider such effects from the current crisis, hoping by then to have enough data to gauge the impact on state revenues.
Brewbaker notes that the council saw two significant signs of strength in Hawaii's economy, the fact that excise tax revenue and withholding taxes on wages have both been running more than 5% above year-before levels.