General fund forecast to grow 15% this fiscal year

Another sign of Hawaii’s economic recovery came Thursday when the state Council on Revenues forecast a 15% increase in the state’s general fund for the fiscal year that’s already underway as visitor arrivals in the past six months already have surpassed the 3.3 million tourists who came to the islands in fiscal year 2021.

The Council on Revenues originally considered projecting general fund growth of more than 27%, but split on voting to approve a 15% increase following more than an hour of discussion of possible variables, such as another surge in COVID- 19 cases, a new variant, ongoing global supply chain issues and the likelihood that the Fed will raise interest rates three times this year, among other factors.

With the tax and revenue implications of COVID-19 federal aid still being resolved, the Council on Revenues then voted unanimously to forecast general fund growth in fiscal year 2023 at only 6.9%.

The more robust prediction for the 2022 fiscal year — which began July 1 — is based largely on Hawaii’s resurgent tourism industry, which already has seen 4 million visitors since the summer, or nearly a million more than in the entire 2021 fiscal year.

Despite surging cases of the omicron variant in Hawaii, “U.S. visitors don’t seem to care, they’re traveling,” said Council member Carl Bonham. “It doesn’t seem to matter what’s going on.”

Since mid-December, visitor bookings primarily on Oahu are up in “the 300%-400% range,” Bonham said.

Earlier this week state economist Eugene Tian forecast that Hawaii will see 8.8 million tourism arrivals this year and 9.9 million by the end of 2024, just shy of the more than 10 million visitors who broke records just before COVID-19 took hold in early 2020.

Thursday’s robust economic forecast will add ammunition to growing calls from state lawmakers to do more in the upcoming legislative session to help low- income residents and working families.

House Speaker Scott Saiki has called for an increase in Hawaii’s $10.10 minimum wage.

And a new coalition of state House and Senate members called the Working Family Caucus plans to introduce bills that would make Hawaii’s earned income tax permanent and refundable; exempt unemployment payments from state personal income taxes; enact paid sick and family leave programs for all employees; expand rental tax credits; and raise the minimum wage to $18 an hour by 2026, including wage increases connected to cost-of-living increases.

Progressive Democrats such as state Sen. Stanley Chang (D, Diamond Head- Kahala-Hawaii Kai) also plan to introduce another slate of bills to increase Hawaii’s inventory of affordable housing.

The upcoming effort to increase Hawaii’s minimum wage is generally supported by the Chamber of Commerce of Hawaii, with details to be worked out.

But the Grassroot Institute of Hawaii worries that raising the minimum wage and other ideas proposed by the Working Family Caucus could lead to job losses or increase the cost of living.