Administration keeps lid on spending

The Abercrombie administration says it remains optimistic about the state’s economic recovery but will continue to withhold 5 percent of discretionary spending from state departments as a precaution.

The 5 percent restriction will be used as a contingency reserve in case the recovery is not sustainable. A budget memo sent to state departments Friday said the state’s tourism-driven economy is vulnerable to national and international factors, including a contraction in federal spending, economic volatility in Europe, slowdowns in Asia and unrest in the Middle East.

"Even though the state is doing better financially and fiscally, it’s still more prudent to have available a contingency reserve for overall statewide operations should there be any issues or developments that could curtail the overall economic condition," said Kalbert Young, the state’s budget director.

The two-year state budget that took effect Monday calls for $11.8 billion in spending for fiscal year 2014 and $11.9 billion in spending for fiscal year 2015, with a healthy carry-over balance, or surplus. The state Council on Revenues is also projecting steady growth.

Young said the administration has chosen to release all of the money budgeted for state departments this fiscal year except for the 5 percent restriction on discretionary spending.

During the recession, the executive branch had been releasing money to state departments quarterly, then, as the economy recovered, the administration started to release money in larger amounts but still restricted discretionary spending.

Discretionary spending does not include money for salaries or other mandatory budget items.