HONOLULU (HawaiiNewsNow) - With the state fiscal year now two-thirds over, excise tax collections are running substantially ahead of last year, a significant indicator of economic recovery in Hawaii.
In February, the data for which were released Friday by the Hawaii Department of Taxation, general excise and use tax receipts came to nearly $254 million, and the cumulative take since the fiscal year began last July 1 is more than $2 billion.
The year-to-year increase is technically 6.1%, but state officials said after dialing out revenues that come from improvements in tax collection procedures, 5.2% is more like it.
That is close to, and appears to provide confirmation for, this week's revised Council on Revenues economic growth forecast for 2015 of 5.5%, which in very rough terms translates to $200 million in potential additional revenues for the state government.
The Hawaii constitution requires a balanced budget, and the official revenue assumptions are generated by the Council on Revenues, a committee of economists from government, the private sector and academe which met this week to review its forecast.
When more tax revenue is coming in the state can spend it or bank it, and several lawmakers this week argued for the latter, noting that the state has a cash reserve of about 10 percent and a reserve closer to 15 percent would better cushion the state from the next downturn.
The general excise tax is a proxy for economic activity because it attaches to most financial transactions in the state including nearly all business and consumer spending.