The forecast drop means a swing of more than 2 percent into negative territory, largely in line with what the administration had estimated in its end of fiscal year crunch.The Council on Revenues is the panel of economists that lawmakers and the governor rely on to forecast how much taxpayer dollars they'll have to spend.
Its last regular meeting was weeks ago, forecasting a sliver of growth year over year, but at the request of the governor they met again and revised this fiscal year's revenue downward by more than 2 percent to negative 1.6 percent. This would add about $95 million more to the budget gap just between now and June 30th, bringing it to about $227 million.
"The implication is the economic recovery has not proceeded as rapidly as once though," said Paul Brewbaker, a member on the Council of Revenues. "Things aren't as good or getting as good as we thought they were."
Not helping are the factors that prompted the special session.
The administration asked them to meet to take into account the possible impacts of the Japan earthquake and tsunami, a corresponding drop in travel to Hawaii, unrest in North Africa, oil price spikes, and the likely effects of federal earmark cutbacks.
"When you have more frequent meetings you're not really saying anything about kind of the underlying movement, you're saying more about what just happened," Brewbaker said.
The council acknowledged the 25 percent immediate drop in tourism from Japan and expects effects to linger but not with a crippling effect.
"Big and certainly problematic, probably manageable for tourism sector participants, but of a smallish character in terms of annual fiscal year revenues," Brewbaker commented.
The council maintained its projections of a large recovery next fiscal year at 11 percent growth, followed by 6 percent in 2013.
However, the carry-forward effect of this fiscal year's revision -- and the growth of state spending in the projected biennial budget -- means a more than $1.1 billion gap between what the state expects to collect and what they want to spend.
"To meet the immediate shortfall over the next three months, we will enforce a 10 percent spending reduction for all department," Governor Abercrombie said in an official statement Tuesday afternoon. "We will also use the Rainy Day, Hurricane Relief and special funds."
