Hawaii’s budget surplus shrinks to $750M

The state general treasury ended the last fiscal year with a $750 million surplus, meaning the state government has a respectable budget cushion but not as large as it was in the previous three years.

The general treasury fund balance on June 30 was quite a bit less than Gov. David Ige’s administration projected in testimony to state lawmakers earlier this year. State Director of Budget and Finance Laurel Johnston predicted in late February the state would close out the budget year with a cash balance of more than $956 million.

Johnston said in an emailed response to questions that after she made that projection in February, state lawmakers committed hundreds of millions of dollars in additional funding to various “high priority items,” including $125 million that was appropriated for emergency flood relief for Kauai and Oahu.

Lawmakers also committed $200 million to the Rental Housing Revolving Fund in the last session of the state Legislature to try to accelerate development of affordable rentals, and earmarked another $30 million in cash to finance “ohana zones” for the homeless on Oahu, Kauai, Maui and Hawaii islands.

The ending balances in the general treasury at the end of each fiscal year offer a snapshot of state finances, which have generally been solid as the tourism and the overall state economy boomed during the Ige years. The ending balance is the money left over after the state closed the books on its $7.25 billion general treasury budget for fiscal year 2018.

Ige has repeatedly imposed across-the-board spending restrictions on state departments, a practice that was sometimes criticized by state lawmakers. However, those restrictions helped the state to post a record general treasury surplus of nearly $1.028 billion on June 30, 2016.

The year-end balance has declined since then, and was less than $894 million on June 30, 2017. The latest data shows it continued to decrease to $750.3 million as of June 30, 2018, according to the state Department of Accounting and General Services.

During the last session of the Legislature, Senate Ways and Means Chairman Donovan Dela Cruz criticized Ige for “overspending,” and warned his colleagues that the Ige administration’s six-year budget plan showed the state was “not living with its means.”

Dela Cruz was a supporter of U.S. Rep. Colleen Hana­busa in her bid to oust Ige this year, which suggested his criticisms might have a political motive, but Dela Cruz said Wednesday the new data support his point.

“That’s exactly what we said last year,” Dela Cruz said. “”If the administration doesn’t figure out a way to increase revenues other than raising taxes and doesn’t limit its expenditures, or at least do things in public-private partnerships to provide services (and) limit expenditures, then we’re going to be continually spending more than we bring in.”

Dela Cruz said the Legislature has been unable to examine “legacy programs” that may not be effective and therefore should be cut from the budget. Instead, administrations keep adding new programs or personnel on to existing spending.

Last year lawmakers began requiring departments to cut a position for each position the administration wanted to add.

“We cannot just keep adding to the budget,” he said. “On top of that, we’re trying to limit our unfunded liability, so we shouldn’t be growing government to begin with.”

Over the years the state has accumulated billions of dollars in unfunded liabilities for public worker pensions and health care costs, and each additional employee adds to the amounts the state will eventually have to pay for those benefits.

However, the state also has committed billions of dollars to cover those costs in the years ahead, and has significantly increased its annual payments in recent years to set aside funding for those obligations.