Council on Revenues lowers economic forecast for 2013 - Hawaii News Now - KGMB and KHNL

Council on Revenues lowers economic forecast for 2013

HONOLULU (HawaiiNewsNow) -

HONOLULU (HawaiiNewsNow) - Hawaii homeowners who install solar and photovoltaic systems enjoy a hefty 35 percent tax credit. But that money doesn't make it into state collection coffers.

"These kind of overly generous tax credits causes all kinds of problems because we lose revenue," State House Finance Committee Chairman Marcus Oshiro said..

The tax credit is a big reason the State Council on Revenues lowered its revenue growth projection for 2013 from 7.5 percent to 5.3 percent. The drop of roughly two percentage points equates to a drop of about $100 million dollars in revenue.

"It's the tax law that's jerking us around," chairman Richard Kahle said. "Every house built has to have a solar on it, or some kind of PVC on it. And that means every house gets a tax credit. Multiply that by two, three per house, you got a problem."

The council said another problem is an overestimate of revenues from the suspension of certain general excise tax exemptions. The council thought it would bring in about $300 million dollars.

"What the staff is saying is that estimate of revenues to be gained has really dropped to around $70 million" said Lowell Kalapa, president of the Tax Foundation of Hawaii.

Oshiro said subtracting $100 million could mean restricting Medicaid payments to hospitals, and financial aid to community health centers and other services. But he said there is time to make adjustments

"The governor can restrict spending, not let out contracts, and next year come back with a revised financial plan," he said.

The downward forecast comes amid strong tourism numbers. Visitor spending and arrivals are up. The Council on Revenues will take it all into consideration again when it crunches the numbers for its next meeting in September.

Copyright 2012 Hawaii News Now. All rights reserved.

Powered by Frankly