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Monday, September 15, 2014         

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Governor stays 'flexible' on budget

An updated revenue forecast in January will help determine whether tax hikes are needed

By B.J. Reyes

POSTED:


Gov. Neil Abercrombie says his administration will wait until the Council on Revenues issues its quarterly forecast next month before deciding whether tax increases or any other type of revenue-boosting measures are needed to balance the two-year budget he proposed this week.

"We'll deal with the revenue question and where we go with that and what we're going to need when we have the Council on Revenues projections," Abercrombie said Thursday at a news conference in his office. "We're making the best projection we can right now from the figures that are available to us."

Abercrombie's budget, which calls for $439 million in new spending next fiscal year with an emphasis on early childhood education programs and upgrading the state's antiquated computer systems, is based on the Council's September forecast of 4.9 percent revenue growth in fiscal year 2014, which begins July 1.

The Council could revise that forecast when it meets Jan. 3. Through the first four months of the current fiscal year, state tax collections are up 11.3 percent from the same period a year ago, but Council members have raised concerns over how renewable energy tax credit claims — which may begin to show up on tax returns early in 2013 — could reduce state income.

"We're flexible," Abercrombie said. "We think that so long as we have the key programs in mind and in line that we'll be able to make such adjustments, and we'll make recommendations for such adjustments as seems worthwhile for that kind of investment."

Abercrombie presented the budget to the Legislature on Monday, as required by law, but did not discuss details at that time out of respect for the death that day of U.S. Sen. Daniel Ino­uye.

On Thursday, Abercrombie and state Budget Director Kalbert Young highlighted the budget's long-term strategy toward addressing early childhood education, updating inefficient and antiquated state computer systems and putting money toward the state's unfunded liabilities associated with employee and retiree health benefits.

"The administration is going to put out the target and the mark for the state of Hawaii to get on a pre-funding strategy to address its unfunded liability that equates to a start of $100 million a year," Young said. "It represents only a fraction of what is actually required of the state, though."

The budget includes about $59 million in each fiscal year for information technology initiatives and improvements to the state's aging computer systems, $44.9 million over two years for the Executive Office of Early Learning and early childhood education and health initiatives, and $29.3 million over two years for digital curriculum for school Common Core State Standards.

"We are putting forward what we think are the fundamental necessities that we have to address as a state," Abercrombie said. "They can't be addressed, essentially, by individuals alone and be accomplished."






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