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General fund revenues down for fiscal year 2008

MEDIA RELEASE

The state Department of Taxation has released the final tax revenues for fiscal year 2009, which show general fund revenue collections decreased by $436.1 million or 9.4 percent compared to fiscal year 2008.

The final tax collections represent $56.7 million additional general fund revenue loss compared to what the Council on Revenues had projected for the fiscal year that ended June 30 when it last met on May 28.  

The additional revenue loss means the state is now facing a budget shortfall in excess of $786 million through June 30, 2011.

Initial estimates by the department indicated the additional revenue loss for the year to be between $125 million to $150 million.  

However, the state made a concerted effort to increase tax collection efforts to make certain the fiscal year ended with the highest possible balance.  

These increased efforts in June included the tax amnesty “Tax Fresh Start Program” to provide eligible taxpayers an opportunity to pay their back taxes to the state while avoiding penalties. Additionally, the state was able to settle two large outstanding tax cases in the final days of June. 

The June 2009 tax collections reflect economic difficulties in the months ahead.  

Declared Estimated Taxes, which show how much taxpayers are projecting in current and future income, had been holding steady at between $426 million to $430 million for fiscal years 2006 to 2008.  

This past fiscal year, Declared Estimated Taxes dropped significantly to $262.5 million, a 39 percent fall from last fiscal year.  

This is an indicator that Hawaii residents are projecting their current and future incomes to be significantly less. 

Another troubling trend is the drop in Withholdings on Taxes and Wages, which saw a steep decline in the last month of the fiscal year.  

Whereas monthly Withholding on Taxes and Wages ranged from $118 million in January 2009 to $106 million in May 2009, this number dropped significantly to $77.8 million in June 2009.  

The steep decline is likely attributed to decreases in wages and increases in unemployment. 

“The additional revenue loss as well as these two worrisome trends show that our economy is continuing to weaken,” Gov. Linda Lingle said.  “It is imperative that we all work together to continue to make tough, realistic decisions to close the budget shortfall and remain focused on growing our economy for the long-term.”

statetaxrevenues09

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