The state closed the last fiscal year with a net gain in assets for the first time since 2006, another mark of the state’s economic recovery.
Kalbert Young, the state’s budget director, views the net position — assets minus liabilities — as a broad indicator of the state’s net worth and overall fiscal health. The Comprehensive Annual Financial Report, the state’s audited financial statement, shows the net position increased by $307.1 million in fiscal year 2013 to $4.8 billion, up from $4.5 billion.
The net assets figure complements the record $844 million budget surplus at the end of the last fiscal year, a carry-over balance that reflects cash flow in relation to the state’s $12 billion budget.
Gov. Neil Abercrombie held a news conference at the state Capitol on Monday to highlight the economic improvement and the fact that the annual financial statement was completed on time. The state was embarrassed after filing the fiscal year 2010 financial statement in October 2011, a 16-month lag.
Credit-rating agencies and prospective bond investors had criticized the delay. Moody’s Investors Service cited persistently late financial reporting as a factor in its May 2011 decision to downgrade Hawaii’s bond rating.
State budget analysts and auditors have set a target of completing the annual financial statement in about six months after the fiscal year closes in June. After the lag three years ago, which was partly blamed on the Lingle administration, the Abercrombie administration has met the annual target.
"Part of it was political. Part of it was indifference from those who had financial responsibility, whether in the Legislature or in the executive, to getting it done," said Abercrombie, who has framed his re-election campaign on the state’s economic turnaround.
Abercrombie said Young came to him early after he took office in 2010 and said that the delayed financial reporting was "absolutely unacceptable."
"We cannot kick this can down the road, too, with all the other cans that got kicked down the road by those who ostensibly had, who supposedly had, financial responsibility in the state and who failed to act on it," the governor said.
States across the nation are reporting budget surpluses from the economic recovery after the recession. But in many states — Hawaii included — the surpluses are partly a function of overly cautious revenue forecasts that underestimated the growth in tax collections.
Young said the increase in the state’s net position, for example, was due to the accelerating growth in revenues and slower-paced growth in operating expenses.
State Rep. Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu), chairwoman of the House Finance Committee, said she and other lawmakers are being cautious about new spending out of concern about the next economic downturn.
"It’s being mindful of the notion that we are going to have some type of a downturn. If we can curtail our spending now, maybe the downturn won’t be as bad because we’ll be able to handle it," Luke said.
