What To Do With $844 Million?

What do you do with an $844 million state budget surplus? You read that right: $844 million. That is, even by the calculations of this mathematically challenged English major, almost a billion dollars! No chump change, that.

No siree, and from the day Gov. Neil Abercrombie and his estimable budget director announced the number, visions of ways to spend $844 million have filled the heads of state department directors and their deputies, not to mention principals and teachers, professors and deans, and random state workers at their posts across our fair islands. A new program here, a new hire there, even early childhood education for all, perhaps?


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Senate Ways and Means Committee chairman David Ige. File photos

Not so fast, says Sam Slom, the only Republican member of the Senate Ways and Means Committee.

“I don’t believe we have a budget surplus at this time,” says he. “And if we do, I think we should give it back to Hawaii’s taxpayers, who’ve been overtaxed for too long. Then 100 percent of it would be used productively, rather than wasted on government lawyers along the way.”

State House Finance Committee chairwoman Sylvia Luke is more reassuring.

“In June, at the end of fiscal year 2013, the state had an $844 million surplus,” she says. “The Council on Revenues (on which the governor and state legislators do their budgeting) had predicted revenue growth at 6.7 percent. They were conservative; it came in at 9.9 percent. Tourism spending and the economic turnaround did it.

“We were prudent in our budgeting last year – there was a $483 million carryover from the previous year, and another $180 million in lapsed funds that weren’t spent. It came out to $845 million.”

So why not spend it? Why not turn some of those visions into realities?

“We had cash last year,” says Luke, “but we didn’t fund some of the governor’s requests because members had questions that had not been answered. Funding a program constitutes a commitment. It has to be warranted. It shouldn’t be done simply because we have a surplus; $844 million seems like a lot of money, but we could spend it easily in a couple of years.

“The economy is cyclical. Six years ago, we had a big surplus, but we spent it all down during the recession, and we raided funds. We’ve learned from the mistakes of the past. No one wants

Furlough Fridays again. We want to put aside money in the rainy day and hurricane relief funds.”

Senate Ways and Means Committee chairman David Ige echoes Luke’s concerns.

“We have to be careful about spending and restore fiscal soundness,” says Ige.

“We need to restore reserves and address unfunded liabilities: the Medicare benefits and retirement promises made to state workers.”

Ige is quick to point out that over the past four years, the benefit package for new state employees has been changed: “We’ve reduced the state’s contribution. New employees will pay an increased share.”

And like Luke, Ige points to how quickly $844 million can disappear: “Gov. Abercrombie has submitted a supplemental budget for 2015 of $500 million, while the Council of Revenues has recently reduced its estimate .8 percent for this year, from 4.1 to 3.3. That equates to $150 million.”

But not alarming, in the governor’s view. In a statement following announcement of the council’s reduction, Abercrombie said: “My administration has submitted a supplemental budget that is able to accommodate revenue fluctuations – even slight declines – while furthering our initiatives.” And maybe even a vision or two.