Governor Abercrombie
Governor Neil Abercrombie

Governor AbercrombieGovernor Neil Abercrombie says he has a contingency plan if the federal debt crisis stops the flow of hundreds of millions of dollars in U.S. spending here next week.

Abercrombie said he met with local financial leaders and cabinet members to draw up the short-term plan.

“Together we are taking a sober look at the possibility of a federal default and the impact it could have on the State of Hawaii,” the governor said in a news release.

“We have a sound plan and are prepared to keep our economy stable,” Abercrombie said.

No details of the plan were made public.

Although the governor said “top bankers have pledged their support… if the state finds temporary funding disruptions,” his press secretary, Donalyn Dela Cruz said later that “the state is not considering any external borrowing.” “

If and when the federal government stops funding programs here, Dela Cruz said, “we will be compiling information on what specific programs are affected.  With that information we will refine our action plan to address the situation.”

The governor’s office quoted state Budget Director Kalbert Young as saying “a cash conservation strategy” has been adopted so that contingency funds will be available to “cover federally-funded state programs for a short period of time.”

This week California officials said they had made arrangements to sell $5.4 billion in short-term debt to a consortium of lenders that included Goldman Sachs and Wells Fargo Bank.

“California had to obtain this interim financing to protect the State from the immediate, drastic consequences of a failure by Washington to resolve the debt ceiling impasse by the Aug. 2 deadline,” California Treasurer Bill Lockyer said Tuesday.

According to Gary Fujitani of the Hawaii Bankers Association, local banks have “substantial liquidity that is ample to weather any temporary financial correction” in state finances.