A. Sen. Colleen Hanabusa, president, Hawaii State Senate
We are seeing a downturn in the local economy. We have been fortunate that, until 2007, Hawaii experienced strong and consistent economic growth, with state revenues climbing 4.5 percent from fiscal year 2002 through 2006. Our economic growth in 2005 was ninth in the nation, and in 2006 we enjoyed the lowest unemployment rate in the nation.
Today the picture has changed. While our economy continues to grow, it is at a much lower rate than expected. In the middle of 2008, we still have not caught up to the growth that had been projected in 2007 alone. The Council on Revenues, which predicts our revenue growth, forecast growth at 6 percent compounded for 2007. Instead, we experienced growth at 3.9 percent for 2007, and we are anticipating 3.5 percent growth for 2008 if we are fortunate.
While Hawaii has continued to see economic growth and is doing better than other areas nationally, it is not a rosy picture. It is difficult to compare our current situation to what our state experienced in the wake of the 9-11 attacks. There, our nation's concerns were not only economic, but included public safety and national security. Economically, while we did foresee a potential loss in international travel, we also anticipated more American travelers wanting to stay on U.S. soil. After the initial shock and concerns, our tourism industry rebounded and has remained as a strong foundation for continued growth.
Today's economic pressures are different, have broader effects and show more potential to ripple through our economy as a whole. Rising fuel prices impact not only tourism and travel, but also our day-to-day budgets, including food, consumer goods and gasoline. Challenges in the financial sector could affect the availability of consumer credit and funding for business development and expansion. These could be broad, long-term effects that will take more long-term planning to address.