Gov. Abercrombie Seeks to Reverse State Employees’ 5% Pay Cut

Gov. Neil Abercrombie has submitted his 2013-2015 biennium budget to the Hawaii Legislature.

In his request for funds, the governor allocated approximately $6.1 billion for fiscal year 2014 and $6.3 billion for fiscal year 2015.

The budget would reverse the 5% pay cut that was put into effect for state employees after the 2008 financial crisis gutted state revenues.

Included in the request are capital improvements to the tune of $1.7 billion in 2014 and $906 million in 2015. Priority is being given to repair and maintenance projects for public and educational facilities, Abercrombie’s office said. Projects already up and running will also be first in line for funding.

Abercrombie has requested over $435 million in new spending, including new information technology initiatives, enhanced digital curriculum, and early childhood care. But the largest portion of that request, $118.1 million in 2014 and $172.8 million in 2015, is allocated for health premium payments and prepayments for other post-employment benefits.

Earlier this year, credit rating agencies expressed apprehension over the state’s large, poorly-funded retiree health benefit liabilities.

Kalbert Young, director of the state Department of Budget and Finance, indicated that Abercrombie’s requests to the legislature are meant to stabilize state finances, stating “our budget allows our state to make clear and deliberate steps in addressing unfunded liabilities that otherwise would continue to threaten our future fiscal solvency.”

Although the governor is attempting to address long-term fiscal issues, he has indicated that the state’s positive economic outlook affords the opportunity for additional spending, explaining “while uncertainties continue to loom on the federal level even this late into the calendar year, there is good reason to focus on Hawaii’s outlook as optimistic, even if moderated.”

The 2013-2015 biennium budget is available online at http://hawaii.gov/budget.