HONOLULU - A lack of construction and worries about swine flu caused Hawaii's economic seers to forecast that tax revenues will continue to drop before bouncing back next year.
The Council on Revenues predicted Thursday that revenues will decline through June, but the islands are set for a sharp rebound afterward.
''We're taking notice of some improvement,'' said Paul Brewbaker, the council's chairman. ''But at the same time, there are lingering challenges, primarily in the form of construction.''
This week's news of an uptick in tourism - Hawaii recorded a monthly increase in visitors last month for the first time since February 2008 - was not enough to outweigh concerns over the future.
The number of contractors seeking private building permits is down significantly, and there's a chance that swine flu could infect large numbers of the U.S. population, which would prevent them from taking Hawaii vacations.
Worsening revenue figures put additional pressure on state govern
ment employees to accept concessions during their ongoing labor negotiations, said Speaker of the House Calvin Say. About 1,100 public workers are already facing layoffs, and Gov. Linda Lingle wants other public employees to take unpaid days off.
''To close the remaining budget shortfall, we will need to reduce the state's labor costs, which comprise 70 percent of our operating budget,'' Lingle said. ''At the same time, the public also needs to re-evaluate its expectations of what services government can provide given the realities of our current budget situation.''
The new estimate means the state budget shortfall has widened about $98 million over the next two years, bringing Hawaii's total deficit to $884 million.
The tax revenue forecast is for a 1.5 percent decline in this fiscal year, which runs through June, and 6.5 percent growth in the next fiscal year.
''Maybe we have bottomed out,'' said Say, D-St. Louis Heights-Wilhelmina Rise. ''Looking out the window, I'm optimistic that maybe by the middle of next year, you'll see maybe four or maybe five (construction) cranes, rather than what I see today: just two cranes out there.''
State lawmakers said they would consider legalizing some form of gambling or taking hotel tax money from county governments.
Tax hikes are possible, but it's unlikely that the Republican governor and majority Democratic Legislature would support them during an election year.
''I'm very hesitant about raising the G.E.T. tax (general excise tax) at this point,'' said Sen. Donna Mercado Kim, D-Kalihi Valley-Halawa. ''A lot of businesses are just barely making it, and to add that onto them at this point in time . . . it's just a downward spiral.''
By MARK NIESSE, The Associated Press
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