By TREENA SHAPIRO
By TREENA SHAPIRO
Associated Press
HONOLULU — The Council on Revenue’s latest quarterly outlook shows the economy is improving at a faster clip than anticipated in January.
Council members on Wednesday upgraded their forecast for the current fiscal year to 12 percent, up from 11.5 percent. Chairman Richard Kahle Jr. said it looks like the economy has recovered.
“Tourism is good and tourism takes the rest of the economy with it,” he said after the meeting. “Yes, there are problems. There’s a problem in Europe. There could be a problem with Iran, but right now, there’s no problem and that’s where we’re coming from.”
Although member Miriam Niwao pushed for a more conservative projection, the others agreed to 12 percent because models indicate overall growth in the economy.
“The news out of the U.S. economy has been consistently better. We actually got an employment report today that was better than what we expected,” said Carl Bonham, director of the University of Hawaii Economic Research Organization.
“Barring some unforeseen possibilities like much higher oil prices or a war, we generally think the economy is improving faster and tax revenues are growing as well,” he added.
The forecast had predicted 14.5 percent growth six months ago, but the latest prediction remained a positive sign. With each percentage point equaling about $45 million, the state now has some additional flexibility heading into the fiscal year beginning July 1.
The forecast reflects gains in tourism due to airlines reaching into new markets, such as Australia and New Zealand. It also anticipates growth in the construction industry, especially if the high-speed rail project continues to move forward.
Bonham explained that because construction goes in cycles, it should begin to bounce back as employment improves and people buy homes again.
House Finance Chair Marcus Oshiro said the forecast won’t affect his committee’s version of the budget, but will give the Senate more breathing room when the budget bill crosses over March 14.
“This is good news for us because it gives us a little more to address the needs right now, especially for the governor. This gives them a reprieve. Maybe we can go back in and look at some critical services they might need to restore,” Oshiro said.
State Budget and Finance Director Kalbert Young said the administration was working out some structural issues with the budget.
“Overall, the Council’s latest projection is encouraging as we work towards alleviating projected minor shortfalls in the state’s budget in the near future, and we remain cautiously optimistic in regards to the actualization of these new revenue projections,” Young said in a statement.