Kalbert Young of Maui presents State Financial Plan to Legislature

By Wendy Osher

State Interim Director of Finance, Kalbert Young of Maui today presented the state’s Financial Plan and Biennium Budget to members of the House Finance and Senate Ways & Means Committees.

Kalbert Young. Photo courtesy County of Maui.

“In addition to a crash course in learning the intricacies of the state budget,” said Young, “it has been a world-wind exposure to just a few of the myriad of issues and fiscal challenges facing the State of Hawaii.”

During his testimony this morning, Young said the layoffs, severe cuts and strict attrition policy over the last few years have taken a toll on the state’s ability to sustain delivery of core services. “It is quite clear that we will need to selectively restore some of the previous budget cuts in order to address critical program deficiencies,” said Young.

The administration will also be tasked with reassessing the base budget and wish-list items prepared under the previous administration. Young said the planned timetable for submitting the budget messages representing the Administration’s budget is early to mid-March.

“We realize that this submission will be later than normal in the legislative timetable; however, we need adequate time for the new directors to come up to speed on their respective department budgets and for the Administration to properly evaluate and prioritize the requests,” said Young.

Young said the administration will be requesting emergency appropriations to address funding shortfalls that require immediate attention. The request list for FY 2011 includes:

• Temporary Assistance for Needy Families program deficit;

• Medicaid program deficit;

• Increased employer contributions for Hawaii Employer-Union Health Benefits Trust Fund health benefits pursuant to the December 23, 2010 agreement between the State and Counties, and the Hawaii Government Employees Association, United Public Workers, Hawaii State Teachers Association, and University of Hawaii Professional Assembly;

• Operating requirements of the Office of the Governor and Office of the Lieutenant Governor; and

• Operating requirements of the Reapportionment Commission, which convenes on or before March 1, 2011 as required by Section 2, Article IV of the Hawaii State Constitution.

Young said the administration is actively working to close the budget shortfall and will be submitting the necessary corrective actions through budget messages and bills during the 2011 Legislative Session.

Background Information:

The Executive budget and general fund financial plan were transmitted to the Legislature on December 20th. The base Executive budget was prepared by the previous administration and provides for continuation of State services at their current level.

For FB 2011-13, Young said the budget includes $10.867 billion in FY 2012 and $11.082 billion in FY 2013. This represents an increase of 6% and 8%, respectively, over current levels with increases noted for Medicaid health care payments, expiration of furlough savings, general obligation bond debt service and Employees’ Retirement System and FICA contributions.

For the Capital Improvements Program budget, Young said the recommendation was for a total of $483.6 million in FY 2012 and $486.2 million in FY 2013. One of the larger general obligation bond funded Capital Improvements Program requests was for: $35 million in FY 2012 and $4 million in FY 2013 for health, safety and code improvements, and $31 million in FY 2013 for capital renewal and deferred maintenance at UH campuses, statewide.

The general fund financial plan presented today was based on the Council on Revenues’ September 10, 2010 general fund projections. The tax revenue projections provide for a 2 percent growth for FY 2011 over FY 2010, a 10% growth for FY 2012, and a 6.0% growth annually for FYs 2013-17.