Whatever the weather forecast is for this last day of the year, when you talk about money and Hawaii’s government, the prediction should be just more sunshine.
All the indicators are up and everything should be set for a bright 2018.
But instead, lawmakers are looking at the supplemental budget sent in by Gov. David Ige and are thinking cutbacks, restrictions and funding lapses.
First off, why? And secondly, why does Hawaii continue with budget cutting in times of surplus? It has become a multi-year trend.
First look at the good news. Last week the Honolulu Star-Advertiser reported visitors to Hawaii last month “dropped an estimated $1.29 billion into the state economy, or 4.5 percent more than last year.”
And the state just reported that the unemployment rate for November was 2.0 percent, compared to 2.2 percent for October. Economists say a rate that low amounts to full employment.
Everyone is working, the engine of Hawaii’s economy, tourism, which is firmly worth more than a $1 billion a month, is set on warp drive — yet the modest state budget is looking at deficits through Fiscal Year 2023.
“The spending is not conservative because they are deficit-spending all the way till 2023. They are putting the monies into the Rainy Day Fund,” said one House Budget Committee veteran who asked not to be identified.
“For six consecutive years from FY2014 to FY2019, the state’s estimated fiscal picture for the upcoming fiscal year has been ‘under water,’ meaning that estimated revenues would be lower than estimated expenditure,” said another Budget Committee member asking for anonymity.
Part of the reason is that the budget is balanced by carrying over unspent money from the previous year.
At the end of the 2014 fiscal year, the carryover was $644 million. That’s how you can spend more than you take in: use the money you saved from last year.
The state budget tables include one called, “Variances between budgeted and actual or estimated expenditures.”
Much of what the House and Senate budget committees do is look at variance reports.
For instance: Say the Department of Defense had a budget of $134 million, but actually spent only $49 million. That’s nearly $85 million not used. It doesn’t just go to another department that wants it; it doesn’t even go into the general fund. Instead that $85 million is part of the surplus kicked over to the next year.
In total, the state appropriated $13.7 billion in
FY 2016-17, but actually spent only $12.2 billion, leaving about $1.4 billion on the table. And yes, you pay taxes for what was appropriated, not what was spent.
So when the governor or a legislator says they are cutting back spending, don’t think that is particularly a good thing. First, you already paid taxes on the fullprice budget, not the “cut the budget to the bone” budget.
And finally, if it was in the budget because it was needed, then why wasn’t it spent?
Richard Borreca writes on politics on Sundays. Reach him at 808onpolitics@gmail.com.