Associated Press HONOLULU — The state plans to tighten spending rather than increase taxes to cover a predicted $19.3 million state budget deficit in fiscal year 2013, Hawaii officials said Monday. ADVERTISING Budget and Finance Director Kalbert Young spoke Monday
Associated Press
HONOLULU — The state plans to tighten spending rather than increase taxes to cover a predicted $19.3 million state budget deficit in fiscal year 2013, Hawaii officials said Monday.
Budget and Finance Director Kalbert Young spoke Monday at an informational briefing before the state Legislature’s money committees.
No new measures were introduced at the hearing, held just four days after the Council on Revenues downgraded its economic growth forecast by 3 percentage points to 11.5 percent. The administration is still adjusting its budget request to the Legislature, originally drafted anticipating 14.5 percent economic growth.
Without offering specifics, Young said the immediate impact can be controlled by restricting expenditures administratively, though.
“I don’t think we need to be overly concerned with increasing taxes,” he said.
The council’s predictions offer a much bleaker outlook for 2014 forward, when budget deficits could exceed $100 million annually. Young said he believes the administration and Legislature have time to work on a long-term financial plan to avert a crisis.
Local economists who spoke at the hearing explained the state’s economic recovery has been gradual, and slower than anticipated. Most of the growth in 2011 was really carried over from 2010, said Carl Bonham, executive director of the Economic Research Organization at the University of Hawaii.
The tourism industry ended 2011 almost where it began in January, Bonham said. He added, “Like the visitor industry, the job market has just gone over sideways.”
Overall job growth increased just over 1 percent in 2011. “It’s going in the right direction, it’s just not fast enough,” Bonham said.
State Department of Business, Economic Development and Tourism Director Eugene Tian echoed many of Bonham’s predictions.
“The economy is still on the recovery path. It’s just not at expansion yet,” he said.
Tian noted that this is the first time in three years the state has seen growth in its labor force. This creates a challenge, he noted, because Hawaii hasn’t had the increase in jobs seen in other states.
“More people are now coming into the labor force and looking for jobs,” he said.
Economist Paul Brewbaker, a former member of the Council on Revenues, offered a less conservative view than his colleagues, telling lawmakers they can’t see through to recovery if they remain too focused on risks.
“You’re never going to get as much revenue as you think you’re going to get when you move the dials around a little bit,” Brewbaker said.
