In compliance with Article VII, Section 9, of the Hawaii Constitution, the Abercrombie Administration today submitted its Executive Supplemental Budget for Fiscal Biennium 2013-2015 and updated Program and Financial Plan for 2013-2019 to the state Legislature.
“The supplemental budget and plan continue responsible management of state fiscal affairs in order to build upon the $1.1 billion turnaround our state has achieved,” Gov. Neil Abercrombie said. “At the same time, we recognize that Hawaii’s improved fiscal position allows us to better address important issues such as early learning and development, support for our seniors, environmental protection, and homelessness. The supplemental budget provides an opportunity to navigate our economic environment for the maximum benefit of the people of Hawaii.”
The administration further committed to building the financial strength of the state by outlining in the plan a strategy to recapitalize state reserves to higher than pre-recession levels.
“We have set a targeted objective to build state reserves to 10 percent of general fund revenues,” said Kalbert Young, state finance director. “These reserves will allow the state to weather future economic downturns and mitigate against cyclical public service cutbacks.”
Accordingly, the Emergency and Budget Reserve Fund will receive $50 million in fiscal year 2014. The Hurricane Reserve Trust Fund will receive $50 million in fiscal year 2014, which is in addition to the $55.5 million in general excise tax revenues transferred this fiscal year, pursuant to Act 62, SLH 2011.
Through separate legislation, the administration will also be proposing the transfer of $50 million to each fund in fiscal year 2015. The estimated balance of Hawaii’s reserves after these transfers will be more than $372 million, or 5.6 percent of projected general fund revenues in fiscal year 2015 –already more than halfway to the 10 percent target.
Simultaneously, the state’s commitment to forward fund its Other Post-Employment Benefits (OPEB) unfunded liability begins this fiscal year with a landmark payment of $100 million and, in fiscal year 2015, a payment of $117.4 million.
The supplemental budget continues to provide stimulus to the economy while still adhering to the optimized debt profile that has been achieved through proper management of the state’s long-term debt. The budget includes funding for an additional $351.7 million in new general obligation bond-funded capital improvement projects.
The state will more appropriately address much needed repair and maintenance projects by converting $187.4 million in previously approved bond-funded expenditures to general funds. The budget also proposes to fund an additional $100 million in repair and maintenance in fiscal year 2015. By directing more bond funds to long-term assets and using general funds to address immediate and short-term repair and maintenance, the state continues its more fiscally prudent management of capital improvement projects.