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Governor outlines 'storm' of fiscal challenges

Abercrombie also says his administration closed a $214 million budget gap in its first seven months

By Star-Advertiser staff

LAST UPDATED: 8:24 p.m. HST, Aug 17, 2011

Gov. Neil Abercrombie, in a status report on the state’s financial condition, said today the state has closed a significant budget deficit but faces an “undeniable storm” of fiscal challenges that could upend the state’s economic foundation.

In an address at Washington Place cast live over the Internet, the governor said the state closed a $214 million deficit from the time he took office in December through the close of the fiscal year at the end of June.

The governor outlined five fiscal challenges that he said are tempting to ignore but must be addressed.

He cited an $8 billion unfunded liability in the public-worker retirement fund and a $14 billion liability in the public-worker health care fund.

He warned of soaring health-care costs that are posing a burden for government and the private sector.

He talked of an over-reliance on imported energy and food.

He said the state has failed to invest in education for children and jobs creation.

And he said potential cuts in federal Medicaid and defense programs by Congress, along with the lack of federal money to provide services to Pacific migrants, could damage the state’s economy.

“These are threats we can't run away from,” the governor said.

Abercrombie also announced that his budget advisers have completed the $50 million in discretionary cuts expected of the administration in fiscal year 2012 and fiscal year 2013.

The targets were reached mostly through financial management, such as restructuring debt service, and most state departments escaped the steep cuts that were feared.

Abercrombie said the transition to his “A New Day in Hawaii” plan is under way, repeating his broad goals to create jobs, invest in people, and transform government so it is more efficient.

Revisiting a theme from his campaign, he said the state could not sustain the status quo.

“What we need now is faith and trust in ourselves. We can do it. We are doing it. We're succeeding,” the governor said.

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