Hawaii Lawmakers Expected to Raid Special Funds to Close Gap
The state is going to have to tap into special funds to balance its books, the state’s Budget and Finance director, Kalbert Young, told Civil Beat Monday.
With a widened budget gap revealed late last week, Young said he expects Hawaii lawmakers to raid the state’s special funds to make up the shortfall.
Gov. Neil Abercrombie reinforced that message in an impromptu press conference after a bill signing Monday.
“If this isn’t a rainy day, I don’t know what is,” Abercrombie said, referring to the growing shortfall. “This shortfall we’re talking about, we’re just talking about getting through June 30.” That’s the end of this fiscal year.
Following last week’s lowered forecast by the Council on Revenues, the state’s shortfall swelled to $128 million for the remainder of the current fiscal year due to slowed revenue growth. For the upcoming two-year budget, the deficit is now close to $1 billion.
Young told Civil Beat the state’s priority is to address the current budget year, which ends in three months. The short time frame makes it especially challenging to raise any new revenue, which means the state will likely have to rely on reserve funds and spending cuts.
“We have to get through this first budget year first before we can even think about the upcoming biennium,” Young said. “We did have a strategy when the deficit was at $70 million, so to now take it to $128 million, the options are very much limited … For the current year, it’ll revolve around looking at special funds or curtailing program expenditures, but even that would be very limited because the current state of state operations — the state isn’t even providing basic, minimal services — is not at optimal levels.”
The largest of these so-called special funds include the state’s Rainy Day Fund, which has about $46 million sitting in it, and the Hawaii Hurricane Relief Fund, which has a balance of about $117 million. Lawmakers dipped into these emergency funds last year as well, taking $67 million from the hurricane fund to eliminate teacher furloughs and $24 million from the rainy day fund.
Abercrombie had previously said he wanted to hold that reserve money in case it was needed for the upcoming two-year budget.
House lawmakers have already approved a measure — — which would transfer $42 million (“or so much thereof as may be necessary”) from the hurricane fund into the state’s general fund for “fiscal 2011-2012.”
In the Senate, lawmakers recently approved a bill — — that would repeal 16 special funds (including the community college and UH-Hilo bookstore revolving fund and the Sen. Hiram L. Fong scholarship endowment trust) and take some money from another 23 special funds (including the energy security special fund and the geospatial information and data integration special fund). The bill initially would have raided 138 of the state’s special funds to help address the shortfall. The latest version does not specify how much money would be diverted.
Young said the administration is working closely with leadership of the House Finance and Senate Ways and Means committees.
“Between the Legislative branch and the executive branch, we are exploring what are the opportunities out there,” Young said. Although the governor’s proposed budget plan has already been turned over to lawmakers, Young said the administration “feels comfortable that we are engaged.”
