The nonpartisan, unpaid group of seven economists and business executives provides long- and short-term forecasts of the state’s economy. By law, what the group estimates has to be considered by the governor and lawmakers in determining state expenditures, enacting any revenue-related legislation, and preparing the state’s budget.
The group prepares forecasts on state revenues for each fiscal year as well as quarterly estimates that include all taxes and income owed to the state. Its revenue estimates and any revisions are reported every June 1, September 10, January 10, and March 15 to the governor and Legislature.
In addition to tax revenue, the council also estimates total personal income, a factor in computing the state general fund expenditure ceiling. The figure has averaged around $53 billion in recent years. The income estimates and any revisions are reported twice a year — on August 5 and November 5 — to the governor, Legislature, director of the state Department of Budget and Finance, and Chief Justice of the Hawaii Supreme Court.
The group is comprised of seven unpaid volunteers. While it is administratively attached to the state Department of Taxation, the council is an independent body. The Tax Department’s research and planning branch provides the council with raw data and acts as a support staff. Of the seven members, three are appointed by the governor for four-year terms, and two each are appointed by the Speaker of the House of Representatives and the Senate President for two-year terms.
The Council meets prior to the due dates of its six annual reports, but is not required to comply with the law on open meetings for public agencies when confidential tax information is discussed. However, all forecasts submitted to the governor and Legislature are made public.
The Council on Revenues was born out of the historic 1978 Hawaii State Constitutional Convention, where major changes were made to the state constitution. The idea behind the council's formation was to help ensure that the Legislature does not spend money it doesn't have.
Only one other state has a budget that is tied to forecasts by an independent panel, according to the National Conference of State Legislatures.
For the most part, a state's governor and lawmakers make separate projections and then negotiate a budget, according to the nonprofit group. Only South Carolina has a group similar to the Hawaii Council on Revenues: a four-member Board of Economic Advisors established in the 1970s as the "chief economic advisor and general economic consultant to the state." The South Carolina advisory group is required by state law to provide revenue impacts to lawmakers for proposed legislation, and also performs revenue forecasting and evaluation of revenues for state programs.