After a blistering first year in office, the air filled with brickbats hurled over his attempts to erase $1.2 billion in budgetary red ink and other issues, Gov. Neil Abercrombie finally may have reason to smile.
Another legislative opening day looms, but some encouraging financial figures have lightened the gloom this time around. Tax collections have started to recover, due largely to the post-recessionary rebound in tourism activity.
That’s the primary factor in the most recent forecast from the state Council on Revenues: revenue growth of 14.5 percent. If that projection is borne out, the yield would be surpluses of $199 million when the 2011-12 fiscal year closes in June and $234 million at the close of the following fiscal year. As a result of this uptick as well as some budgetary savings in debt service and other areas, the governor is seeking to supplement state spending.
It’s good news, but a cautious approach is still in order, given the fragile state of the economic recovery. Keeping in mind that the loss of nearly 1,000 jobs with the Hawaii Medical Center closure is expected to drive up the state’s unemployment rate, lawmakers reconvening in a few weeks still should be judicious about overcommitting the state on the expense side of the ledger.
That said, the governor’s proposed supplemental budget shows sensible spending priorities. Among the line items he wants to boost:
» $23.3 million for welfare client services contracts.
» $8.1 million in Medicaid payments.
» $6.8 million in Child Protective Services contracts.
All of those sectors of the state budget became frayed in the aftermath of the 2008 downturn, when economic distress drove up the need for services at the same time tax coffers were low. Especially with additional dark clouds hovering over the employment landscape in Hawaii, reinforcements for the social safety net are in order.
For the state Department of Education, Abercrombie also proposed an additional $13.5 million for the public schools’ student spending formula, which should enable the Board of Education to restore some programs that recently went under the knife.
However, more inquiry is needed to clarify the future of student transportation spending, for which the governor proposes a $25 million additional allotment. The cost of providing school bus service has skyrocketed in recent years, from $28 million in 2003 to $74 million this year. Several contractors said they were contacted by the FBI to discuss the bidding process, so it seems bus-service procurement has the attention of federal authorities. Lawmakers need to keep a watchful eye on this issue.
Legislators crafting the supplemental budget also need to make sure that whatever extra money is available as revenue projections are refined is invested prudently. An emphasis on projects that will create more efficient government going forward — including funds for information-technology enhancements that should enable better streamlining of state functions — is essential.
For the present, it seems likely that state leaders have been handed an opportunity to repair some of the bedrock public services to the needy and to education, as well as to make a down payment on a lean but more effective state government. They should not let this chance pass by.
