Another ominous sign for the state budget: Revenue collections are coming in even lower than the state Council on Revenues predicted.

Collections through the first 11 months of the fiscal year are off by 9.8 percent, according to the state Department of Taxation. That is lower than the 9 percent decline estimated by the council for the fiscal year that ends this month.

Unless collections rebound, the state will be an additional $36 million short at the end of the month. Gov. Linda Lingle has already said she will delay paying $130 million worth of bills this month to avoid a deficit, but may have to take other steps if revenues fall further.

"We are starting to feel the effects of the global and national economy," said Kurt Kawafuchi, the state's tax director. "People aren't spending as much, coming to Hawai'i. Obviously the swine flu had an impact on us. A lot of cuts, in terms of business conferences here.

"Disposable income I think is down."

The council in May significantly lowered its prediction for this fiscal year — from a 5 percent revenue decline to a 9 percent decline — removing $611 million in expected revenues through fiscal year 2011. Lingle has put the deficit at $730 million because her advisers do not believe the state will receive as much money from tax increases and other revenue-generating options as lawmakers believe.

"These are the numbers that the governor will have to rely on to make her decisions," state Rep. Marcus Oshiro, D-39th (Wahiawa), the chairman of the House Finance Committee, said of the 9.8 percent drop in actual collections. "That's steep."

Lingle has cited the projected $730 million deficit as justification for her order of furloughs for state workers starting in July. State department directors are still developing plans for how and when workers will take three furlough days a month — 72 days over two years — which Lingle estimates will save the state $688 million.

CUTTING COSTS

The Lingle administration on Monday posted a question-and-answer memo for state workers that repeated Lingle's warning that furloughs are the alternative to layoffs of up to 10,000 workers. The memo said such a layoff "would seriously compromise the state's ability to provide public services and maintain public health and safety."

The memo said furlough adjustments will be automatically deducted from state workers' paychecks starting July 20 for workers hired before July 1998, and starting Aug. 5 for workers hired after July 1998.

Furloughs apply to state workers under Lingle's control. The governor said she will impose spending restrictions equivalent to worker furloughs at the state Department of Education, University of Hawai'i and the Hawai'i Health Systems Corp., which are governed by independent boards. The governor has urged these departments to also pursue furloughs.

Public-sector labor union leaders met Monday to discuss their options, including whether to legally challenge Lingle's furlough plans.

Lower revenue collections could prompt the administration to restrict spending in the two-year budget approved by lawmakers beyond furloughs and a $42 million reduction in state healthcare spending for low-income adults.

According to the state Department of Taxation, general excise and use taxes — the largest category of tax collections — are down 8.4 percent from the last fiscal year through May. Hotel room taxes are off 9.8 percent. Individual income taxes are down 12.5 percent. And corporate income taxes are off by 44.4 percent.