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Tuesday, September 02, 2014         

ON POLITICS


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A balanced budget is nice but it's not really required

By Richard Borreca

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It is becoming an annual exercise in political agony, balancing the state budget — but is it really required?

Of course, it is better for Hawaii to not spend more than it takes in. It gives bond holders and rating agencies a warm feeling to know we are not printing money in the Capitol basement.

Also, it just feels good to know that someday, maybe not soon, but someday you will get your state tax refund, because there is money left in the treasury. But, is there an actual law that says, Thou Shall Balance the Budget?

"There is no express requirement for a balanced budget in either the state Constitution or the applicable statue," a 1997 opinion from then-Attorney General Margery Bronster reads.

Bronster went on in her advice to Earl Anzai, who was budget director at the time, that "in operation, a balanced budget is required."

That opinion, however, is a tad murky.

The Constitution and state law are clear that the governor must send the Legislature a budget plan and "submit bills to provide for such expenditures and for any recommended additional revenues or borrowings by which the proposed expenditures are to be met."

The Bronster opinion said if there is not enough money to pay for the proposed budget, "revenue enhancements to cover the deficit must be proposed, or reductions in expenditures must be proposed to balance out the anticipated revenues."

That balancing, however, is the governor's job.

That budget sent by the governor had a catch, according to the Constitution: It must be below a spending ceiling set by the Legislature.

During the last Constitutional Convention back in 1978, convention delegates said in a committee report that there must be "some form of limitation on state government."

The report directed: "The State does not circumvent the expenditure ceiling … by engaging in deficit spending."

But Gov. Neil Abercrombie's own budget starts out by admitting that it will exceed the spending ceiling by 10.5 percent during the next fiscal year and 1.7 percent the following. The reason given is the canceling of furloughs, the lack of federal stabilization funds and increases in Medicaid, debt service and fringe benefits.

So precisely how does this budget balance, if right off the bat it exceeds the easily shattered spending ceiling?

Back in 2004, Gov. Linda Lingle tried to add some of that much-needed precision by calling for a constitutional amendment declaring that "the Legislature shall balance the general fund appropriations with the state's current estimated general fund revenues and unencumbered cash balances."

The bill cleared the Senate Judiciary Committee, which at the time was chaired by now-U.S. Rep. Colleen Hanabusa. The committee report clearly said it found "there are no requirements for the Legislature to balance its spending with estimated revenues."

It went on to say there was a need for the Legislature to "only appropriate moneys from the general fund that do not exceed the State's current estimated general fund."

But, the proposed amendment was never seen again.

Instead, what happens is that every year the Legislature solemnly intones that it is required to "balance the budget" and the next year starts off with the declaration that Hawaii's budget is again posting a big deficit.

—————

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






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