HONOLULU — The Council on Revenues on Tuesday raised its forecast for Hawaii’s general fund tax revenues, saying it now expects revenues to increase by 6.3% during the current fiscal year instead of 3%.
The council cited predictions that visitor numbers will outpace last year and expectations that COVID-19 hospitalizations will fall as more people get vaccinated.
Council members said their earlier forecast for the fiscal year ending in June was overly conservative. The council made that prediction in May, before travel soared during the summer. The council maintained its forecast of 4% growth for the next fiscal year, which ends June 2023.
Hawaii law requires the governor and lawmakers to use the predictions by the Council on Revenues when the state budget is drafted.
Traveler numbers have dropped from their peak numbers above 30,000 a day during the summer.
Carl Bonham, a council member and economics professor at the University of Hawaii, attributed some of this decline to seasonal changes and some to rising COVID-19 cases fueled by the delta variant.
Even so, he said an average of 19,000 travelers flew to Hawaii each day during the first week of September.
That’s far above the numbers recorded during the same time last year when Hawaii was still requiring all travelers to quarantine for two weeks upon arrival. Hawaii now allows travelers to show proof of vaccination or recent negative COVID-19 tests to avoid quarantine.
Bonham predicted hospitalizations will drop as vaccinations rise, helping travel come back around Thanksgiving.
“My view is that by Christmas, the tourism industry will recover. And we’re going to have a pause with very little job growth, but we’re still going to be comparing — for tax purposes — this winter with last winter,” he said.
Bonham said his tax revenue outlook takes into account a drop in unemployment benefits and loss of federal stimulus payments compared to the prior fiscal year.
Fellow council member Scott Hayashi said he was somewhat optimistic about the outlook for the fiscal year.
“With Europe potentially shutting down to U.S. travelers, Hawaii looks like a great destination once again,” Hayashi said. “They can’t get to Europe. They can’t get to Asia If they want to get away, the thought might be they’re going to come to Hawaii.”
Source: Hawaii Tribune Herald