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.
In addition, the budget includes the following increased support for a variety of initiatives:
Investments in Hawaii’s Children
- More than $5.4 million additional for early learning and development initiatives, a priority of the administration. Approximately $4.4 million of that would aid the Executive Office on Early Learning in working with the Hawaii Department of Education (DOE) to establish prekindergarten classes on DOE campuses, and $1 million would fund Family-Child Interaction Learning (FCIL) programs for family engagement for four-year-olds.
- $2.5 million more proposed for Preschool Open Doors. The new voluntary program administered by the state Department of Human Services enhances access to school readiness services for 4-year-old children, with priority extended to underserved or at-risk keiki and those who are not eligible to attend public school kindergarten in the school year they turn 5 because their birth date occurs after the kindergarten eligibility date.
Support for Seniors
- More than $4.5 million requested for programs that support older residents, of which $4.2 million is proposed for the Kupuna Care program and $427,937 for Adult Disability Resource Centers.
- An additional $40 million for conservation purposes at Turtle Bay, as proposed by the Turtle Bay working group last month. The working group was established by Senate Concurrent Resolution (SCR164) during the 2013 legislative session and tasked with developing a conservation action plan to explore and identify conservation alternatives for the undeveloped portions of the Turtle Bay property and surrounding lands with conservation or historic value.
- $1.5 million requested for the Housing First program to assist the most vulnerable of Hawaii’s homeless.
- Ten positions and $1 million to expand Healthcare Transformation initiatives.
- Restoration of eight positions and an additional $188,269 for the Hawaii Department of Agriculture within the department’s pesticides program.
- $3.1 million for Lt. Gov. Shan Tsutsui’s R.E.A.C.H. Initiative for afterschool programs for middle and intermediate afterschool programs
- Approximately $33.5 million to the University of Hawaii, whose Board of Regents committed a portion of such funds towards issuance of revenue bonds for addressing much needed repair and maintenance projects. This amount represents collectively bargained salaries for the University of Hawaii Professional Assembly salaries. But, instead of paying for the salaries out of the tuition special fund, which only affects tuition rates, the funds will free up resources so that the tuition fund remains stable and assists UH’s repair and maintenance $400 million backlog.
“Although there are many priority needs that must be addressed, fiscal sustainability is essential,”Young added. “This plan will allow the state to address its priority needs while positioning itself to best handle uncertainties, such as economic slowdowns or the recent federal government shutdown, by building up our reserves and exercising continued fiscal prudence.”
The Budget in Brief is available for download from the Department of Budget and Finance website, here: http://budget.hawaii.gov/budget/