Newest projection: State tax revenues will drop by a jaw-dropping $2.25B this fiscal year
HONOLULU, Hawaii (HawaiiNewsNow) - The state Council on Revenues on Thursday lowered its estimates on state tax revenues by a jaw-dropping $2.25 billion for this fiscal year and next.
But lawmakers said the lower estimates will not require across-the-board furloughs or pay cuts.
“We think for now we should be able to avoid massive reductions,” said state Rep. Sylvia Luke, chair of the House Finance Committee.
The Council on Revenues estimate is based on the view that Hawaii’s tourism economy won’t recover until 2022.
In their most recent report on the pandemic’s impact, the University of Hawaii Economic Research Organization said a pessimistic scenario would mean nearly 5 million fewer visitors this year.
Hawaii would also see double-digit unemployment this year and 9% unemployment next.
“You have an increase in bankruptcies. Tourist businesses that have been shutdown can only last for so long," economist Carl Bonham said of UHERO’s forecast.
Experts said a prolonged downturn will be especially hard on small businesses.
“The small businesses can’t recover. They’re dead. It’s like trying to water a plant that’s dead,” said Marilyn Niwao, CPA and member of the Council on Revenues.
The UHERO report also provided an upbeat outlook on Hawaii’s economy in which Hawaii’s visitor industry reopens in July and the coronavirus infections are in retreat both in the U.S. and globally.
“In the optimistic, we’re back to 5.5% unemployment," Bonham said.
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