Hawaii state budget

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Hawaii Gov. Linda Lingle signed the FY2011 budget into law on June 28, 2010.^[1] Gov. Lingle proposed in December 2008 a biennium operating budget for fiscal years 2010 and 2011 totaling $22.42 billion, $11.1 billion in FY 10 and $11.3 billion in FY 11.^[2] After contentious negotiation in the Hawaii State Legislature, the balanced FY2011 budget included $1.1 billion in cuts by the governor to generate the money needed to address the $1.2 billion shortfall.^[3]

Hawaii will receive approximately $130 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[4]

See also: The Hawaii State Budget on State Budget Solutions

[edit] FY 2011 State Budget

At the start of this year's legislative session, Hawaii faced a projected $1.2 billion budget deficit through June 2011, but eliminated that shortfall through a budget that includes tax increases, cuts, and savings from last year's layoffs of more than 800 state employees.^[1][5] The budget appropriates more than $10.2 billion for executive branch operations and almost $1.7 billion for executive branch capital improvement projects.^[1]

The state legislature passed House Bill 2200, the state's $11.9 billion budget, on April 27, 2010, and sent it to Gov Lingle.^[1][6][7] The House passed the budget unanimously and there was only one no vote in the Senate.^[8]

Federal funds

Congress approved state aid for education and Medicaid in August 2010 and Lillian Koller, director of the state Department of Human Services, said that the state was likely to get between $30 million and $40 million in Medicaid funding. The state is also anticipating $39 million for education.^[9]

"This federal bailout, like those that preceded it, is intended to be a one-time shot in the arm that must be paid for in the future," Gov. Lingle said in a statement. "It merely defers the day of reckoning that will require a reprioritization of state services and a reduction of spending."^[9]

Cost Cutting

• The final budget cuts 800 state jobs.^[6]
• State lawmakers cut an additional $7.3 million from the operating budget of the University of Hawaii.^[10]

Sources of Additional Funds

• To reach a balanced budget, the state canceled tax credits given to high-technology investors under Act 221, which would save the state approximately $13 million.^[7][6]
• The House and Senate also passed House Bill 2542 which provides for siphoning $46 million from special funds to the general fun to help balance the state budget.^[7]
• The legislature passed HB1907, which caps itemized deductions claimed on state income tax returns until Jan. 1, 2016, for higher income brackets, which would save the state $93 million.^[7][6]
• The state budget also repeals deductions for political contributions.^[7]
• The legislature raised the cigarette tax by $0.20 cents per pack.^[6]
• Car rental fees will increase from $1 per day to $4.50 a day^[5]
• $1-a-barrel increase for imported oil is expected to bring in another $13.2 million.^[11]

Gov. Lingle vetoed a bill that would increase the barrel tax on petroleum products from 5 cents to $1.05, which would generate $22 million a year that lawmakers want to help with the deficit.^[7]

How the budget was balanced The state faced a $1.2 billion two-year shortfall. The House Budget Committee released this list of the budget cuts. Furloughs of state employees lessened the shortfall by $366.7 million and are reflected in the general fund cuts.^[12]

Category	Money Saved
General Fund cuts	$794.4 million
Tax Refund Delay	$275 million
Credit adjustments, loopholes, penalties	$185 million
Non-general fund changes	$77.8 million
Cash CIP lapses	$62.5 million
Tax revenue increases	$58.5 million
Fee revenue increase	$9.5 million

The budget includes a bond measure providing for the issuance of about $326 million in state general obligation bonds to finance state capital improvement projects.^[1]

[edit] Prior Fiscal Year Budgets

2009
The Hawaii State Legislature passed during its 2009 Session a biennium operating budget for fiscal years 2010 and 2011 totaling $24.8 billion, $13.37 billion for FY 10 and $11.4 billion for FY 11.^[13] Gov. Lingle objected to raising taxes to close the revenue gap and used her veto powers on $566 million of increased taxes , which the Legislature quickly overrode.^[14]

The annual financial report for 2009 was reported 14 months late.^[15]

2010
Hawaii’s FY 2010 budget was in deficit before the fiscal year began on July 1, 2009. From March 2008 through August 27, 2009, the Council on Revenues, which forecasts the State’s tax revenues, projected that Hawaii will have nearly $3 billion less revenue than anticipated through June 30, 2011. Gov. Lingle stated in late September 2009, “Through various prudent spending restrictions, the Administration has reduced spending by $2 billion. However, we still face a $496 million shortfall in the next nine months and an additional $529 million from July 1, 2010 to June 30, 2011. That’s a total of $1.024 billion less money we will have in the next 21 months. Because of the huge revenue losses between fiscal years 2009 and 2011, it will take until fiscal year 2012 for our revenues to return to pre-recession levels.” ^[16]

Governor Lingle announced August 4, 2009 that the State would immediately begin delivering written layoff notices to the approximately 1,100 state employees who were previously notified their positions could be eliminated. In addition, the Governor announced the furlough of approximately 900 "exempt excluded" nonunion state employees for three days per month effective September 1, 2009, employees not covered by a court order barring the Governor from unilaterally implementing furloughs for union employees.^[17]

A standoff between Governor Lingle and the public employees unions ensued. The largest public employee union in Hawaii, the Hawaii Government Employees Association, with about 30,000 members will vote in October 2009 on whether to accept a new contract with 42 furlough days over the next two years, which amounts to approximately an 8% cut. ^[18]

[edit] Budget Background

Hawaii has an annual Legislative session and sets a biennial budget in odd years. In practice the budget is submitted each year. State agencies submit their budget to the Governor in September each year. The Governor submits the budget in December, 30 days before the Legislature convenes on the 3rd Wednesday in January, which meets for 60 working days. The state’s fiscal year runs from July 1 to June 30.^[19]

[edit] Budget figures

The following table provides a history of Hawaii's expenditures and gross domestic product (GDP).

Fiscal Year	Expenditures (billions)	GDP (billions)
2000	$8.2 [20]	$40.2 [20]
2001	$8.8 [20]	$41.8 [20]
2002	$9.4 [20]	$43.5 [20]
2003	$9.6 [20]	$46.4 [20]
2004	$9.9 [20]	$50.4 [20]
2005	$10.5 [20]	$54.9 [20]
2006	$11.0 [20]	$58.7 [20]
2007	$11.5 [20]	$61.5 [20]
2008	$12.1 [20]	$64.5 [20]
2009	$12.7* [20]	$67.7* [20]

• NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.

See Hawaii state budget (2008-2009) for more information.

[edit] Accounting Principles

Main article: Hawaii government accounting principles

The Hawaii State Auditor is Marion M. Higa. In May 2008, the Legislature reappointed Ms. Higa to her third 8 year term to start on July 1, 2008. The State Constitution in Article VII, Section 10, establishes the Office of the Auditor. The Constitution specifies that the Auditor be appointed for an eight-year term by a majority vote of each house in joint session. The Auditor may be removed only for cause by a two-thirds vote of the members in joint session. It is the constitutional duty of the Auditor to conduct post-audits of the transactions, accounts, programs and performance of all departments, offices, and agencies of the State and its political subdivisions. The audit reports are published online.^[21]

The Institute for Truth in Accounting (IFTA) rates Hawaii “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Hawaii’s CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[22] Hawaii's CAFRs are published online by the Hawaii Department of Accounting and General Services. Russ K. Saito is the Hawaii State Comptroller.^[23]

Credit Rating	Fitch	Moody's	S&P
Hawaii[24]	AA	Aa2	AA

[edit] Economic Stimulus Project

Hawaii will receive approximately $130 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[25]

Hawaii already receive $2 billion from the $787 billion dollar American Recovery and Reinvestment Act, or the "economic stimulus." ^[26]
For more information on how the federal stimulus funds are being used in the state of Hawaii, visit the state recovery website.

The federal website reports that those districts received $592,211,484 million and $174,075,308 respectively creating combined total of 1,541.5 jobs.^[27]

[edit] Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[28][29]

The ARRP contributed $2,284,000 to Hawaii in federal stimulus funds for the 11the Congressional district, $40,903,941 million for the 15th Congressional district, $1,651,811 for the “00” Congressional district, and $799,656 in the 99th congressional district creating a combined “3.4” jobs or $13,423,355 per job. Hawaii has just two congressional districts.

[edit] Budget transparency

See also: Evaluation of Hawaii state website

House Bill 122 was enacted on July 11, 2007 by the legislature without the signature of the Governor. This bill mandated creation of a searchable grant and contract sight for state expenditures over $25,000.^[30] However, the site failed to launch by the established deadline of January, 2009, and it has since become apparent that there are no plans to launch a transparency database.^[31] New transparency legislation, (Hawaii Senate Bill 659 (2009)), was enrolled to the Governor on May 8, 2009.^[32]

[edit] Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases

State Database	Searchability	Revenue Source	Expenditures	Contracts	Employee salary
None	n/a	n/a	n/a	n/a	n/a

[edit] Limitations and Suggestions

HB 122 limits disclosure to recipients of $25,000 or more. The federal-level legislation set the same limit, so surely a single state such as Hawaii should have a lower threshold. The Legislature should act to reduce or remove this barrier.

[edit] Economic Stimulus Transparency

The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[33] It is estimated that Hawaii will receive at least $650 million in federal funding.^[34]

Two of the projects included $295,743 to conduct field mapping of late-glacial volcanic rocks in West Iceland for geochemical analysis. Hawaii's university also received $210,000 to study learning and cognition in honeybees.^[35]

• The economic recovery website for Hawaii is available here.

[edit] Support for creation of a database

The National Taxpayers Union, Citizens Against Government Waste, and the Grassroot Institute of Hawaii supported transparency legislation (House Bill 122 and Senate Bill 1689).^[36]

Hawaii Senate Bill 659 was introduced by Senator Les Ihara.^[37]

[edit] Public employee salary information

None.

[edit] See Also

Hawaii taxpayer-funded lobbying

[edit] External links

[edit] Additional reading

• Los Angeles Times,"Hawaii is far from an economic paradise," January 2, 2010
• Gov. Linda Lingle,"2009 State of the state address," January 26,2009

[edit] References

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