Hawaii Council on Revenues Versus the Fed
I wouldn’t say I’m a total pessimist, but I’ll admit I was quick to dismiss the rosy economic forecast put out Wednesday by the Council on Revenues.
The advisory group is forecasting Hawaii state revenues will see 10 percent growth next fiscal year, which starts July 2011, followed by five years of annual 6 percent growth. (That growth refers to money in the state’s general fund, which the public fills when it pays a dozen different taxes such as the general excise tax and personal income tax.)
To put that in context, 1 percentage point translates into $46 million. So if the council’s forecast for fiscal 2012 holds true, tax revenue would grow by an additional $460 million.
Don’t get me wrong, I want to see the economy improve as quickly as anyone else. And I have nothing against the group of economists and bankers who gather quarterly to put these reports together for the state. In fact, I admire the fact that they produce these detailed forecasts while holding down full-time jobs.
My skepticism comes from a bleak report put out the same day from the Federal Reserve as well as reporting I did for a Civil Beat story in August that took a close look at the council’s forecasts over the last five years and the instantaneous impacts those projections had as the state weathered the recession.