Hawaiʻi's revenue may be lower than expected this year.
The Council on Revenues has cut the state's general fund revenue forecast from a prediction of 4% growth to 3.3%.
The decrease was due to a potential 17% decrease in May tax revenue — largely based on a drop in personal and corporate income tax revenue.
State Tax Research and Planning Officer Seth Colby said there are several reasons for the adjustment.
One cause, he said, relates to the about $80 million in tax credits that the Legislature passed in 2023.
Another was the accelerated tax payments processed in April due to electronic filing. He said a decline in tourism is also hurting the revenue forecast.
Colby reassured the council that the 17% decrease was a worst-case scenario and that the office is expecting several million dollars more in payments over the last few days of the month.
“If I had to make a guess, I would say probably negative 12% or something for May,” he said. "But with a standard errors of like 3% on either side.”
The drop in tourism was a major concern shared by the council. Visitor numbers have been flat and the hopes of a rebound of tourists from Japan have been muted.
Tax revenue over the summer will be a determining factor for the state's economic outlook, according to councilmember Wendell Lee.
“We're in a very kind of precarious situation and it is hard to judge right now,” Lee said.
“I don't think we're at a place where we panic. It's a little bit of wait-and-see to see how it plays out," he said.
Councilmember Carl Bonham was optimistic that construction would likely boost the economy and was being under-valued.
The state Legislature has mandated using the councilʻs projections to set the state budget.
The council voted unanimously to keep the revenue forecast for next year unchanged at 4.8%.
