Few Options As Hawaii’s Budget Woes Intensify
Hawaii faces a $1.3 billion deficit between now and the end of the 2013 budget year. In the short term, that means lawmakers need to make up a $232 million shortfall in the next three months — but there’s no magic bullet that will generate enough revenues before the end of June.
Spending cuts won’t do the trick. All the low-hanging fruit has been picked. The bottom of the barrel is beyond scraped.
To make matters worse, recovery of the state’s main economic driver — tourism — has taken a blow after the disasters in Japan.
That leaves little choice beyond raiding special funds or reserves to fill the hole.
The most obvious pots would be the Hurricane Relief Fund and the Rainy Day Fund.
But their balances only amount to a little more than $150 million combined. 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 to cover social services for the needy.
House lawmakers have already approved a measure — — that 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.”
Additionally, the state has dozens of special funds, some of which were targeted by , which proposes repealing 16 special funds and taking money from another 23 funds. The bill, which never specified how much money would be diverted, crossed over to the House, but hasn’t moved since March 10.
In the short-term, another possibility would be to take a move from former Gov. Linda Lingle’s playbook: delaying tax refunds.
Gov. Neil Abercrombie hasn’t shared specifics on how he plans to balance this year’s budget. He’s asked the Council on Revenues to revise its forecast to more “adequately reflect the financial picture for the state” given the recent catastrophes in Japan. The group is scheduled to meet Tuesday afternoon.
Keep in mind the shortfall through June is on top of an additional $1.07 billion deficit projected for the next two years. And an option that was once regarded a last resort — raising the general excise tax — looks increasingly plausible, with Abercrombie telling reporters he’s “flexible” on the idea.
Kalbert Young, director of the state’s Department of Budget and Finance, previously told Civil Beat the state’s priority is to address the current budget year. “We have to get through this first budget year first before we can even think about the upcoming biennium,” Young said.
The Senate Ways and Means committee will hold its first public hearing on the state budget Monday, using as the starting point. That version calls for $10.98 billion in spending in fiscal 2012 and $10.97 billion in fiscal 2013.
