Error in state budget has governor chiding the state Legislature

Gov. Neil Abercrombie said Monday that he will use his line-item veto authority and remove about $45 million in bond money for school facilities from the state budget to fix a miscalculation by the state Legislature.

State and legislative budget analysts described the problem as an inconsistency between a bond declaration bill that would set a $3 billion ceiling on general obligation bond spending and the state budget and other bills that would authorize bond spending. The state Constitution prohibits the state from exceeding the bond debt limit unless there is an emergency.

State lawmakers have agreed to restore the $45 million in school facilities bond money when the next session opens in January.

Despite the technical nature of the problem and the agreement with lawmakers on a remedy, Abercrombie held a news conference at the state Capitol during which he implied that lawmakers failed to do their jobs.

"I’m trying to deal with a situation that has been handed to us," the governor said sternly. "Look, the budget bill and the bond authorization bill have to match. They don’t. You have to check the boxes. You have to do the math. It didn’t happen."

Abercrombie chided lawmakers. "You either do your job or you don’t," he said. "I have a job to do. I’m not about to sign a bill that is close. I’m not about to sign a bill that is almost legal. I’m proposing a course of action that will minimize the pain and capitalize, as much as possible, on my ability to be able to correct this course of action with which I’ve been presented."

State Rep. Sylvia Luke, chairwoman of the House Finance Committee, accused the governor of trying to capitalize on the mistake for political reasons. Abercrombie is facing state Sen. David Ige, chairman of the Senate Ways and Means Committee, in the Demo­cratic primary.

Luke and Ige are responsible for the state budget and the bond declaration bill, and they have often been critical of Abercrombie on state financial issues.

Luke said she was not surprised there was a mistake in the bond declaration bill because lawmakers scrambled at the end of the session to find $40 million in bond money to finance a $48.5 million conservation easement at Turtle Bay Resort. Abercrombie had initially wanted lawmakers to use general obligation bonds for the Turtle Bay deal, which would have been covered in the bond declaration bill, but they instead used revenue bonds.

"It’s not as if the problem was just created by the Legislature. The problem was complicated because of the last-minute issue that came up with Turtle Bay," said Luke (D, Punchbowl-Pauoa-Nuu­anu). "And instead of just recognizing that and trying to continue to work with the Legislature on how to resolve this issue, he goes and calls a press conference to pick a fight with his primary opponent, basically."

Luke described the mistake as small in the context of the financial issues confronting the state. "I think this is the kind of thing that puts a strain on the relationship that we have to have to work together," she said.

Ige (D, Pearl Harbor-Pearl City-Aiea) said he became aware of the technical errors last week and has worked with state budget analysts and House and Senate leaders on a correction. "We have agreed on the actions required and avoided a special session that would increase costs," he said in a statement. "The errors are technical in nature and are easily resolvable if the Legislature and administration work together on a solution. I am ready and willing to do this to quickly resolve the situation."

House and Senate leaders and the Abercrombie administration had discussed a potential special session to fix the budget mistake but agreed that Abercrombie could make the change through a line-item veto and that lawmakers would restore the bond money to the State Educational Facilities Improvement Fund next session. The state Department of Education, which agreed with the remedy, said the temporary loss of the bond money would not disrupt any school facilities proj­ects.

At the news conference, state Attorney General David Louie said it would be "inappropriate and, quite frankly, illegal" for the governor to sign the state budget and bond declaration bill as drafted.

Louie also answered a separate question that has long been a point of debate among many budget and policy analysts: Does the state Constitution actually require a balanced budget?

For practical purposes, the governor and the Legislature have operated under the presumption that it does. But the issue became relevant during the recession, when the state twice finished fiscal years with negative balances.

The Lingle administration blamed an accounting error for a $36.8 million deficit at the end of the 2009 fiscal year and a $22.3 million shortfall at the end of the 2010 fiscal year.

Louie said his interpretation is that the state Constitution requires a balanced budget. "There is not a specific line in the Constitution that says that, or a statute," he said. "But, as taken as a whole, and taken with the way it works, yes, I firmly believe we have to have a balanced budget."