HONOLULU -- As lawmakers prepare to write a budget addressing a shortfall estimated at up to $1.3 billion over three years, the state Council on Revenues was called back into session to set the tax revenues estimate on which, by law, the budget must be based.

The council predicted revenue growth of 0.5 percent two weeks ago, on March 11, the same day the earthquake and tsunami struck Japan. Within days, it became clear that the tragedy would have a negative effect on Japanese tourism to Hawaii, which some expert said makes up about 20 percent of the visitor market.

Gov. Neil Abercrombie said that the disaster would have a terrible impact on the Hawaii economy and on tax collections, which were already projected to be well short of the amount needed to fund all government programs. He called for a new forecast from the council, with the expected effects of the Japanese disaster figured into the forecast.

The council began its meeting trying to analyze the current tax collections, which were already lower than needed to meet the last estimate.

Members also expressed frustration that the state Legislature and governor have consistently written budgets to the exact amount of the forecast, when it would be more prudent to set budgets below the council's revenue estimate, which would put less pressure on the council to predict revenue exactly -- which most experts consider impossible.

The dilemma caused nearly an hour-and-a-half of discussion, in which the impact of the Japan disaster was actually less of an impact than the slower-than-expected tax growth due to other unknown factors.

The council finally settled on an estimate that revenues would actually fall this year, down 1.6 percent from last year. In dollar terms, that is about $90 million dollars less than the prior estimate.

The council members were heavily influenced by poor tax collections in February, which forced them to downgrade the estimate for the remaining months and lower the overall forecast. At one point, one economist asked if it was possible that the tax department is falling behind in depositing checks from taxpayers. A tax department employee indicated that was indeed possible.

Regardless of the accuracy of the new forecast, because the law requires lawmakers to accept, emergency budget cuts will still be necessary this year, as well as potential tax increases and budget cuts to close the three-year deficit, which was last estimated at $1.3 billion.