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State ends fiscal year $300 million in black — governor

July 20, 2012
By AUDREY McAVOY , The Associated Press

HONOLULU - Hawaii ended the last fiscal year $300 million in the black, prompting Gov. Neil Abercrombie on Thursday to say he wanted to concentrate on restoring some government services like workers killing rats and agriculture inspectors looking out for invasive species.

The governor said his administration would "take a big step forward in stabilizing" growing unfunded liabilities like employee pension contributions, but he didn't offer specifics on how he would do so. A report released last month said Hawaii tied for ninth among states having funded the lowest share of its pension obligations in 2010.

Part of the surplus money - or $127 million according to an estimate of the governor's budget and finance director, Kalbert Young - stems from an improving economy and more money flowing into state coffers than the Council on Revenues had predicted.

Article Photos

Gov. Neil Abercrombie speaks at a news conference Thursday at the state Capitol in Honolulu. Abercrombie said the state ended the last fiscal year with a $300 million balance.
AP photo

But the rest comes from labor savings and fiscal management by department heads, Young said.

Abercrombie hailed the news, saying "strong, sober, and serious financial management" was allowing the government to bring back some of what it cut during the economic downturn.

"We think there's sufficient flexibility, as a result of the proven fiscal management until this point, to concentrate on restoring some services," he said.

As examples, he offered agriculture inspectors to prevent pests - like the coffee berry borer that has devastated Kona coffee crops - from entering Hawaii. Or vector control workers to take out rats in Waikiki so tourists don't encounter them.

"Should we be spending $72 million a year with the Hawaii Tourism Authority and then have people experience rats running all over the sidewalk? No, we've got to restore these basic services," he said.

Abercrombie's predecessor, Gov. Linda Lingle ordered most departments to cut their budgets by 14 percent in 2009. Abercrombie has restored some critical functions cut - like adding a few more agriculture inspectors - since he took over in December 2010, but spending still remains lower than before.

He said he's also committed to other administration priorities like restoring Hawaii's watersheds, investing in early childhood education, and updating the state's technology system.

But Lowell Kalapa, president of the Tax Foundation of Hawaii, said Hawaii needs to address unfunded liabilities - for retired state employee pension and health benefits - before it can restore funding for programs curtailed or eliminated over the past two years.

"So now we're going to be the good guys and restore all the cuts that the previous administration and previous legislature instituted?" he asked. "That's not a very responsible position to take because of the fact that we are one of the two dozen states that has huge outstanding obligations as far as employee benefits."

Young said the administration was looking at how to address liabilities, which he said exceeded $20 billion.

"That's got to get fixed. You can't fix that overnight. But we're definitely in a better position to at least entertain the question of how you get there when you have a positive balance," Young said.

The governor sounded confident he could do both.

"I'm going to be sticking to a found fiscal program, a sound fiscal plan, and the result will be is that we'll be able to meet our obligations, we'll be able to restore services, we'll be able to keep everybody working, and we'll take a big step forward in stabilizing what has been a steadily increasing debt with regard to unfunded liabilities," the governor said.

Hawaii's credit rating - Moody's Investors Service last month affirmed its A2 rating on $4.9 billion of Hawaii's general obligation bonds - shows that credit rating agencies believe the administration, Abercrombie said.



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