In preparing the Executive Supplemental Budget, Gov. Abercrombie set forth an overall strategy of maintaining a sustainable multiyear financial plan that calls for an efficient government and lays a foundation for the long-range future of our state. In doing so,
In preparing the Executive Supplemental Budget, Gov. Abercrombie set forth an overall strategy of maintaining a sustainable multiyear financial plan that calls for an efficient government and lays a foundation for the long-range future of our state.
In doing so, he empowered our state financial team to develop a budget and six-year financial plan that continues to build up fiscal reserves, while investing in critical state services and managing our long-term liabilities.
We must remember that it was less than four short years ago that the state and county implemented furlough Fridays, wage reductions, closed programs and underfunded others, due to an economy spiraling downward. We saw many Hawaii families suffering from increased bankruptcy filings, foreclosures and layoffs.
Our local economy has experienced some dramatic improvements over the last three years. Tourism has returned to peak levels and we are about to begin a period of accelerated construction that will further fuel Hawaii’s economic growth. We have worked hard to ensure that government revenues are growing at a robust rate, and we did it without having to create new taxes over the last three years.
The Great Recession reminds us how volatile the global economy has become, but also how exposed Hawaii’s economy is as well. By being more planful and setting aside some of our current financial gains into reserves, we can be better prepared to weather the ups and downs of economic cycles much better than before.
We want Hawaii to be better prepared heading into the next economic cycle than we were heading into the last one. Building reserves allows us to keep government open for business and sends a strong message to Wall Street that Hawaii is serious about prudent financial management. This comes back to us in the form of low interest rates that allow us to build affordable housing, fix of our aging schools and protect our natural resources.
During these favorable economic times, investing in critical government services makes perfect financial sense. Our long-term objectives include investing in information technology for government, supporting the business community, combating homelessness and educating our keiki.
Achieving financial sustainability is not single-faceted. It is not simply defined as reducing spending, nor is it about increasing revenues. A financial plan for sustainability is much more robust and multifaceted, and we have a plan in motion that builds a vision for financial sustainability.
It is about building financial reserves and managing expenditures, but it is also about providing for increased public services. After all, that is the reason we all contribute taxes.
Sustainability means we must come to grips with our growing liabilities. Ignored for decades, unfunded liabilities in the state pension system and health fund are finally being addressed. Meeting our obligations and paying down past debt is a key component of the Abercrombie Administration’s financial plan.
Our economy was hit hard in the recent years and we need to remember the lessons learned. In order to develop a sustainable government that ensures economic prosperity, we must first have a budget that is stable, prepares for hard times, invests during good times and pays down its debt. We are on the right track to a sustainable financial future.
• Kalbert Young is the state of Hawaii finance director.
