Senate Minority Reports on Flawed Budget, Financial Plan

$104 million in omissions combine with mystery spending cuts to create unrealistic budget scenario

News Release from Office of Senator Sam Slom January 7, 2016

HONOLULU — As the 2016 legislative session prepares to unfold and legislative committees dive into budget deliberations, the Hawaii Senate Minority intensifies its effort to bring sharper focus on the state's long term financial plan.

Prompted by today's Council on Revenues forecast of a meager 0.7% increase in revenue growth for FY 2017, as well as Governor David Ige's submittal to the Legislature of the Executive Supplemental Budget in December 2015, the Senate Minority published a report[1] pointing out some red flags.

Senator Sam Slom says, "The projections for long-term state spending are low.  Yet state spending has increased steadily for over a decade and there have been no policy decisions made to reverse that trend.  So why such low estimates?"

According to the Senate Minority report, the state financial plan fails to explain why expenditures will decline in FY 2018, and increase only thereafter at the rate of inflation in subsequent years.  However, historical spending trends suggest otherwise.  Annual state spending has increased at an average of 4.9 percent for the last 14 years.

On Tuesday, state Director of Finance Wes Machida testified, and the Senate Ways and Means and House Finance Committee chairs agreed that the Governor's financial plan fails to account for big ticket items.  The most obvious being $85.7 million for collective bargaining contracts expiring this year, and the constitutionally mandated funding of the Department of Hawaiian Homelands (DHHL).  Finally, the Senate Minority points out that health care costs have remained volatile since Affordable Care Act implementation.  That could affect the state's ability to fulfill obligations to employed and retired state employees and their dependents if premium increases outpace low forecasts.

Senator Slom says, "Huge items, like collective bargaining contracts and DHHL funding, have been left out.  Spending is exceeding revenue, putting our cash reserves at stake.  We've had 10 years of economic growth, so if we're hitting a potential peak in the business cycle, then it's even more important that we be cautious, and not pass a budget unless it's based on sound assumptions."

[1] "FY 2017 Executive Supplemental Budget Multi-year Plan: A Case of Inflated Revenues and Underestimated Expenditures," released January 7, 2016.  Preliminary draft prepared by the Senate Minority Research Office and attached to this release.  Edited draft will be available tomorrow at http://hawaii-senateminority.com.

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PDF: FY 2017 Executive Supplemental Budget Multi-year Plan: A Case of Inflated Revenues and Underestimated Expenditures

About the Hawaii Senate Minority

Senator Samuel M. Slom has represented Hawaii’s 9th senatorial district since 1996.  The lone Republican in the Hawaii State Senate, Slom is presently the only single-member caucus in any legislature in the United States.  Slom serves on all Senate committees, sub-committees and special committees, is minority leader and floor leader, and is Vice Chair of the Senate Committee on Economic Development, Environment and Technology.  For further information on Senator Slom and the Hawaii Senate Minority, visit www.hawaii-senateminority.com.