Despite cushion, fiscal cliff fall would be dire for isles

Here are two views of how we are doing: first a warning and then something more cheering.

When Hawaii Sen. Daniel K. Inouye writes back to Hawaii, it is usually good news. Most of his notes back home are about how more federal money is coming our way.

For instance in September, Inouye sent out 14 press releases regarding Hawaii. Seven of those were about federal funds headed our way.

Early September’s announcement was for more than $1 million in National Oceanic and Atmospheric Administration money coming here. Later Inouye announced that almost $13 million was coming to the University of Hawaii for workforce training.

While the news of money from the feds is good, the announcements highlight just how dependent Hawaii is on federal programs.

This is important because in Washington today there is much discussion regarding federal dollars and the so-called "fiscal cliff."

Perhaps not as well-known is that along that fiscal cliff, there is a Hawaii ledge.

The Pew Center on the States last week released a report on how the threatened drastic cuts in federal spending will impact the states.

Hawaii gets a special mention. Noting that all state economies are vulnerable to cuts in federal spending, Hawaii could lose a lot.

"In 2010, federal defense spending on procurement, salaries and wages made up almost 15 percent of Hawaii’s GDP or gross domestic product," the report said.

So far there is just uncertainty regarding how much will change in Washington regarding the "fiscal cliff," which Pew describes as a series of federal tax increases and spending cuts set to start in January.

Besides the possible federal cuts to Hawaii defense spending, there is $32 million in state programs possibly at risk.

"All the programs that we care about the most are going to be significantly hit," Kim Gennaula, president of Aloha United Way, said according to a report in this paper.

If we don’t want to spend Thanksgiving petrified, here is some relatively good news: The state has a lot of money. Perhaps not as much as we need or more than we plan to spend, but a $300 million surplus is not bad.

At the end of the last fiscal year, Gov. Neil Abercrombie announced that the state was doing well enough to be able to count a $300 million surplus. The news was not greeted with great cheers of joy because the administration, the Legislature and the public worker unions all have their eyes on the money.

Still there is now an official report on how well Hawaii is doing.

Fitch Ratings, one of three bond rating companies that check Hawaii’s fiscal temperature, just finished a report to accompany an $800 million bond sale.

"Although debt and other long-term liabilities are likely to remain well above average for a U.S. state, Hawaii has demonstrated its ability to manage these costs," Fitch said.

"Fiscal 2013 is forecast to increase the ending fund balance to $348 million, with growth of 4.9 percent in general overall tax revenues and 8.1 percent in the general excise tax that represents about 55 percent of that total," the report said.

Yes, there are problems — Fitch states the obvious when it says our "geographic location somewhat limits economic diversification efforts."

So in the middle of continuing tough financial times, there is some gravy for this Thanksgiving.

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Richard Borreca writes on politics on Sundays, Tuesdays and Fridays. Reach him at rborreca@staradvertiser.com.