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Tuesday, June 10, 2014
Slom: Abercrombie Should Cut $46M from CIP not DoE
By News Release @ 8:34 PM :: 4340 Views :: Education K-12, Hawaii State Government

Senator Sam Slom says "no" to kicking the can down the road on state overspending.

News Release from Office of Sen. Sam Slom 

Honolulu – June 10, 2014 — Yesterday's news conference about the conflict between the state budget bill and the bond authorization bill doesn’t come as a surprise to the Senate Minority. Senator Slom is the only legislator out of 76 that actually voted no on the budget bill and yes on the bond authorization bill (the latter constrains 2015 general obligation bond authorizations to $962m). According to Senator Slom, "it is important to have clear and concise constraints on the amount of debt the state can consume. Without strong legal protections our taxpayers will be saddled with more and more debt."

Senator Slom has for long argued that the entire $23 billion budget bill was not in balance. The current $444 million discrepancy between the budget bill and the bond authorization bill seems to be the product of what Senator Slom refers to as a "rushed and in haste legislative session."

According to Senator Slom, "legislators were busier with populist projects such as the Turtle Bay easement than with resolving the State's deteriorating financial situation. This discrepancy is just a reflection of the failure of state legislators to consider the ‘big picture’."  In addition, Senator Slom states "It is not like it was all unknown to the legislators and executive[i].  For example, the State's Director of Finance, Kalbert Young, had visited with many legislators later in the session discussing various budgetary issues including state debt.  As for my position, I'm just the only legislator out of 76 who voted "no" on the budget because the Senate Minority had taken the time to identify problems with the budget, listen to the information being shared by the State Budget Director, and the Senate Minority had at that time analyzed the long-term fiscal consequences of the overspending and over borrowing occurring in the state."

The solution proposed by the Governor to allow $399 million of the Department of Education state educational facilities improvement fund to lapse on July 1st seems inevitable at this point.[ii] However, Senator Slom takes issue with the Governor's second plan to borrow $46 million from the Department of Education's budget for fiscal year 2016 in order to balance the remaining part of the budget. "Balancing a budget by borrowing money from future budgets is kicking the can down the road and it is not a sustainable solution" according to Senator Slom.

Currently the state is in a long-term deficit position and the recent June 2nd revenue downgrade (from 0% to -0.4%) by the Council on Revenues indicates that the economy has not come out of a recession yet. Senator Slom says "Tough fiscal times require tough and often unpopular decisions. Instead of "kicking the can down the road" the Governor should use this opportunity to use his line-item veto power to cut $46 million in low priority capital improvements projects in order to balance the budget."

[i] http://www.capitol.hawaii.gov/session2014/CommReports/HB1700_CD1_CCR148-14_.htm

[ii] HB1712 did not include $339m in lapsing appropriations for the DOE CEFI, but HB1700 Budget Bill included the additional $399m.

  *   *   *   *   * 

LINE-ITEM REDUCTION OF STATE BUDGET NEEDED

Budget Bill (HB1700) and Bond Declaration Bill (HB1712) Not in Alignment

News Release from Office of the Governor June 9, 2014 (With explanatory notes.) 

HONOLULU – Gov. Neil Abercrombie, along with Attorney General David Louie and Finance Director Kalbert Young, announced a plan today to address an inconsistency in the amount of approximately $444 million between the budget bill and the bond authorization bill passed by the Legislature that is preventing each bill from being signed into law.

(Wow.  Just wow.)

“The proposed solution is the most efficient path to resolving this situation without the need for any additional costs to the taxpayer,” Gov. Abercrombie said.

(We can't call a special session.  Its not like this is something really important like the gaying of marriage or something.)

“I have consulted with the Speaker of the House, Senate President and the Department of Education. Working together, we believe we can enter the new fiscal year with a functional budget.”

(What a bunch of idiots.)

The Department of the Attorney General and the Department of Budget and Finance advised the governor that the projects authorized in the Budget Bill (HB1700) exceed the amount certified in the Bond Declaration Bill (HB1712).

“Due to legal issues, I have advised the governor that he would not be able to sign the executive supplemental budget bill for fiscal year 2015 in its current form,” said Attorney General David Louie. “In addition, once the budget bill is reconciled, the Bond Declaration Bill could be signed no earlier than July 1, 2014.”

(Did you know that the Legislature is full of lawyers?)

The Department of Budget and Finance reviewed the appropriations and declaration bills and was able to identify that the sources of the discrepancies were in the areas of State Educational Facilities Improvement (SEFI) authorizations, the Judiciary budget, standalone appropriation bills and lapsed projects.

“We were able to pinpoint specific areas that were omitted in the bills passed by the Legislature and have concluded that it will require the governor to reconcile these bills in order to begin the new fiscal year, which starts July 1, with a working supplemental budget,” said Director of Finance, Kalbert Young.

Working with legislative leaders and the Department of Education (DOE), Gov. Abercrombie’s proposed solution would temporarily reduce the general obligation bond appropriation of SEFI projects through a line-item reduction in the budget bill. The total amount of bond projects authorized in HB1700 will therefore not exceed the amount certified in the bond declaration bill HB1712. This would be predicated on the need that the Legislature make-whole the amount reduced from the SEFI authorization when it reconvenes in regular session in January 2015. The DOE confirmed that it will plan to minimize impacts on projects already in the queue. This will necessitate a degree of project management and coordination that was not previously anticipated.

(Translation: DoE executives are now expected to be far more attentive to the multi-million dollar 'details' than Legislators, the Governor and their respective staffs were during the session.  Do as we say, not as we do.) 

# # #

CB: House Finance chair blames mistake on governor's last-minute Turtle Bay deal

Luke expressed disappointment that the governor felt it necessary to hold a press conference on the line-item fix.

“We were working this through,” she said, referring to the executive and legislative branches. “Perhaps this is in view of the election and he wants to pick a fight with his opponent. But to blame this on the Legislature when he shared in the blame as well, I think they should be a little bit sensitive about our timetable. This is the type of stuff that really strains our relationship.”

Abercrombie’s opponent in the Aug. 9 Democratic primary is state Sen. David Ige, chairman of Ways and Means and Luke’s counterpart on the budget....the senator issued a statement later Monday:

“I became aware of the technical errors in the State Budget and the bond authorization bill last week, and have worked with the Department of Budget and Finance and House and Senate leadership to develop the alternatives to correct the errors,” he said. “We have agreed on the actions required and avoided a special session that would increase costs. The errors are technical in nature and are easily resolvable if the legislature and Administration work together on a solution. I am ready and willing to do this to quickly resolve the situation.”

KHON: Governor to take $46M from DOE to balance state budget

SA: Error in state budget has governor chiding the state Legislature

HNN: Abercrombie: $45m cuts needed to balance state budget

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