Gov's Budget Proposal: No Tax Hikes

By Keoki Kerr
Published On: Dec 20 2011 08:43:35 AM HST
Updated On: Dec 19 2011 10:35:26 PM HST
HONOLULU -

Gov. Neil Abercrombie proposed a supplemental budget proposal for the second year of the state?s two-year budget cycle Monday that includes no new taxes.

"We have been able to turn this situation completely around," said Abercrombie, noting that he now predicts a surplus when the state faced a budget shortfall of hundreds of millions of dollars when he took office a little more than one year ago.

Abercrombie and State Budget Director Kalbert Young said because of new, lower-salary contracts with public unions, the state is saving about $60 million, since it's spending less on employee retirement and health benefits. New public worker contracts have increased employees? health care contributions so they split health insurance premiums 50-50 with the state.

The state was also able to save about $25 million in part by refinancing bonds, Young said.

"One year ago, the sentiment and overall tenor of the state economy and the state financial condition was considerably different than the one that we're heading into the next legislative session," Young said.

So the governor wants to fully restore about $174 million to both the Hurricane Relief and Rainy Day funds, funds used by lawmakers during the last session to help balance the budget.

"We'll not only balance the budget, we'll not have to have tax increases, but we'll be able to make some investments in our new day program and some initiatives that we all want to see achieved," Abercrombie said.

Abercrombie wants to restore about $46 million worth of cuts in services for the poor ? money for food stamps, Medicaid and Child Protective Services.

"But it doesn't represent a full restoration to its peak," Young said, estimating the proposal would bring back about 40 percent of the human services cuts made since 2010.

"If we stay on course, then we'll be restoring services that perhaps we would have liked to have done a little sooner, when we can," Abercrombie said.

The governor also proposed spending nearly $60 million in improvements to University of Hawaii facilities across the state, just a fraction of the $426 million in university construction projects on the books.

Abercrombie also wants lawmakers to approve $50 million for public school improvements, a small percentage of the hundreds of millions of dollars of school projects waiting for funding.

The governor said his budget could have a surplus of up to $199 million at the end of the next fiscal year, assuming the state Council On Revenues? forecast of 14.5 percent general fund tax revenue growth actually happens as predicted in fiscal year 2012. Young said even if revenue growth is as low as 13 percent, the state would still see a budget surplus.

The governor's spokeswoman said a proposal to tax pensions, which generated sharp opposition during the past legislative session, will not be proposed by Abercrombie this year.

But there's a chance the controversial tax on sugary sodas could be re-introduced next legislative session, which convenes January 18. The soda tax died in committee last session and never made it a vote of the full State House or State Senate.

While the governor proposed no new taxes in his supplemental budget plan Monday, he said he?d be willing to consider tax proposals made by lawmakers, if they?re necessary for health and environmental improvements.

?To the degree or extent we have to get new revenue sources to accomplish all that, that has to be discussed,? Abercrombie said.

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