State tax collections have declined by 5 percent through the first two months of the new fiscal year, worse than the 1.5 percent drop estimated by the state Council on Revenues.

General-excise and use tax collections, the largest category, are off 5.5 percent, according to the state Department of Taxation. Hotel-room taxes are down 4 percent. Individual income taxes are off 6.4 percent.
Gov. Linda Lingle, in a statement this afternoon, said the lower revenues show the state can no longer maintain current labor expenses.
The Lingle administration and the Hawaii Government Employees Association are in binding arbitration over a new contract and the state and other public-sector unions are also in new contract negotiations.
“The lower actual revenue collections also re-emphasizes that we cannot put off making tough, realistic decisions needed to close the budget shortfall,” Lingle said. “Every month that goes by without a resolution means the state will fall deeper and deeper in the hole, and the amount of savings we will need to make up the difference will only get bigger.”
Lingle said she would work toward a negotiated settlement with unions rather than wait for a binding arbitration decision in December. The governor’s staff said she is meeting with union leaders this week.
An HGEA spokeswoman did not immediately respond for comment but indicated the union would respond this evening.