Graphic illustration by Emily Metcalf

BY JIM DOOLEY — As one state advisory panel is predicting lower-than-expected tax revenues in coming years, another is recommending that the state increase the general excise tax rate by a half-percentage point.

Graphic illustration by Emily Metcalf

Yesterday the state Council on Revenues said it believes the large volume of energy tax credits granted by the state will reduce earlier estimates of expected growth in tax revenues.

The council said in May that overall tax revenues were expected to increase 5.3 per cent in 2013, but downgraded that forecast yesterday to 4.9 per cent.

If the forecast is accurate, overall tax revenues would decrease by some $16 million.

The council also trimmed expected tax growth predictions for future years:

 

FY     Old Forecast  New Forecast
2013             5.3%                4.9%
2014             4.0%                3.9%
2015             6.2%                5.0%
2016             4.0%                1.2%
2017             5.0%                4.2%
2018             5.0%                5.1%
2019             na                     4.6%

 

While Gov. Neil Abercrombie’s administration and state lawmakers try to assimilate those new numbers into new budget plans, a new study commissioned by the state Tax Review Commission forecasts even bleaker numbers when the budget numbers account for looming deficits in public workers pension and health insurance funds.

The study, prepared by a Mainland consulting firm, The PFM Group, recommends that the general excise tax, which generates more than half of all state tax revenues, be increased statewide by 1/2 per cent to 4.5 per cent. The tax already stands at 4.5 per cent on Oahu, with the extra revenue dedicated to funding Honolulu’s $1.5 billion share of the $5.2 billion rapid transit project.

The recommendation will be discussed at a public meeting Tuesday from 9 to 11 a.m. in conference room 305 at the state Capitol.

Mallory Fujtani, public information officer for the Tax Department, said the agency is withholding comment on the report’s findings and recommendations until Tuesday.

The report and the meeting agenda can be accessed via the Tax Department’s website

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Jim Dooley joined the Hawaii Reporter staff as an investigative reporter in October 2010. Before that, he has worked as a print and television reporter in Hawaii since 1973, beginning as a wire service reporter with United Press International. He joined Honolulu Advertiser in 1974, working as general assignment and City Hall reporter until 1978. In 1978, he moved to full-time investigative reporting in for The Advertiser; he joined KITV news in 1996 as investigative reporter. Jim returned to Advertiser 2001, working as investigative reporter and court reporter until 2010. Reach him at Jim@hawaiireporter.com