The state Council on Revenues today predicted a 5 percent decline in revenue for the fiscal year, down from 3 percent, which will force Gov. Linda Lingle to find another $90 million to close the budget gap before the fiscal year ends in June.

The lower forecast also drops the baseline for state spending in the two-year budget cycle. The council estimated 0.5 percent growth in revenue for fiscal year 2010, down from 1 percent, another $22.5 million loss for the state.

The council predicted that revenues would increase by 5 percent in fiscal year 2011, up from 3.5 percent, which would be about a $67.5 million gain.

Cumulatively, the forecast today could take more than $200 million off the table in budget talks, increasing the pressure for spending cuts, layoffs of state workers, or revenue-generating options such as tax increases.

Paul Brewbaker, an economist and chairman of the council, said the council was trying to determine whether the economy has hit a "resting place." The council opted to err on the side of caution for this fiscal year, since revenues could decline further.

The next council forecast is in May, after the state Legislature is scheduled to adjourn.

Lingle did not immediately say how she would close the deficit for this

fiscal year.

"I remain committed to balancing the budget without raising taxes or laying

off employees," the governor said in a statement. "Either of these actions

would further weaken our economy."

State House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo Valley,

Wilhelmina Rise), said it is up to the governor to present her plans for

this fiscal year before lawmakers deal with the two-year budget.

The House Finance Committee has approved a budget that uses a combination of

spending cuts, state worker layoffs, and tax increases to balance the

two-year budget.

The draft is expected to move to the state Senate next week.

State Sen. Donna Mercado Kim, D-14th (Halawa, Moanalua, Kamehameha Heights),

the chairwoman of the Senate Ways and Means Committee, said the governor's

previous budget proposals have not added up.

"She has to tell us what her balanced budget is," Kim said.