Despite budget surplus, legislators could easily add to debt burden

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By Joe Kent

Hawaii has a record-high state budget surplus this year of $4 billion, and here are some of the ways our legislators currently are planning to spend it:

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>> $250 million on tax rebates of $300 for each taxpayer who earns less than $100,000, and $300 for each of their dependents, and of $100 for each taxpayer who earns more than $100,000, and the same per dependent.

>> $350 million to $400 million toward construction of a new Aloha Stadium.

>> $185 million extra for debt service.

>> $350 million for public pensions.

>> $350 million for public employee health benefits.

Photo by Charley Myers

>> $600 million for the state Department of Hawaiian Home Lands.

>> $100 million for the prevention of disease outbreak.

>> $174 million for the University of Hawaii and the state’s community colleges.

Some of those spending plans are encouraging, but some are not. Is there any doubt, for example, that the Aloha Stadium project will be among Hawaii’s future white-elephant boondoggles?

And, sure, it’s great that they are putting money toward the state’s massive debts and unfunded liabilities. But some of those debt payments could actually be for anticipated increases in the pension debt from upcoming public employee salary hikes.

For example, legislators could be aiming to increase public teacher salaries by between $7,700 and $26,000 per year, but that would increase the state’s pension debt by $376 million, according to Thomas Williams, executive director of the state Employees’ Retirement System (see here, page 8).

Most other public unions are still in negotiations for salary increases, some of which may be overdue but would, if authorized, nonetheless increase the liabilities of the state’s benefits systems.

Will our legislators use the record-high budget surplus to pay down the state’s record-high debts? Or will their spending plans end up adding to them? We will update the numbers once the budget finally emerges from behind closed doors.

To see more about where the money might be going, check this out.
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Joe Kent is executive vice president of the Grassroot Institute of Hawaii.

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