Abercrombie's claims state's "in the black" as tax revenues are declining
HONOLULU (HawaiiNewsNow) -
While Gov. Neil Abercrombie has repeatedly said Hawaii’s economy is “back” and “in the black,” the panel of economic experts that advises top state officials has expressed concern about the state’s economy that saw tax revenue decline in the first 11 months of the fiscal year.
During Hawaii News Now's governor's debate on Thursday night, Abercrombie repeatedly said Hawaii's economy is doing very well.
"This state is back, it is in the black and I'm very pleased to say it's going to stay there," Abercrombie said.
But his Democratic Primary opponent, State Senator David Ige, had a more lukewarm assessment.
"The economy is flattening. We're still in good shape but the revenues have dropped. That is a fact," Ige said.
The Council on Revenues, which is the panel of economists, accountants and money experts that advises the governor and lawmakers on Hawaii's economy, just wrote the governor a letter last month that said, "The Council was concerned that the cumulative general fund tax revenue collections so far this fiscal year were lower than expected."
Hawaii tax revenues actually declined by .8 percent for the first 11 months of last fiscal year.
"For the immediate past fiscal year ended June 30, 2014, we actually had negative growth," said Maui CPA and attorney Marilyn Niwao, who is the vice chair of the state's Council on Revenues and wrote the June 2 letter to the governor with the panel’s latest findings.
‘It’s not good that we’re ending slightly negative,” said lawyer and accountant Kurt Kawafuchi, the chairman of the Council on Revenues and former state tax director. “It does cause concern, but it could be a pause after two years of strong growth.”
“Although the Council believed that the economy is still growing …” the Niwao’s letter to the governor said, “…the members expressed much uncertainty about the economy.”
One of their concerns: visitor spending has been declining, partly because of the high prices of hotel rooms and airfares.
"People are coming but they might be spending less, by, for example, buying groceries at Costco, and staying in a condo rather than spending money in the hotel and at restaurants and visitor activities," said Niwao, who owns an accounting firm in Wailuku on Maui.
The panel also is concerned about less spending by Hawaii residents because of federal budget cuts, the sequester and federal budget freezes.
Niwao said economic experts are still cautiously optimistic that the construction activity will increase in the next few years that will help improve Hawaii's economy even though visitor spending has gone down.
Economist Leroy Laney, a professor at HPU and former chairman of the Council on Revenues, said, “It’s hard to say how much of it (Hawaii’s economy) is due to political leadership and how much of it would have happened anyway.”
Abercrombie predicted the state will be more than $500 million in the black when all revenues for the fiscal year that ended June 30 are counted, a final figure that might not be tallied for another month or so.
The Council on Revenues has predicted 5 and a half and 5 percent tax revenue growth in the state over the next two years. But the panel could downgrade those predictions at their next meeting in September, a month after the primary election.