Future Budget Woes Worry Hawaii Officials

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Kalbert Young

BY JIM DOOLEY – The effects of newly downgraded tax revenue projections will be “minimal” for the current state budget but will be “quite considerable and severe” in future years, causing Gov. Neil Abercrombie’s administration to at least consider the possibility of future tax increases, Budget Director Kalbert Young said today.

Young’s comments came in a budget briefing to state legislators.


“Revenue enhancements should be at least reviewed,” Young said.

Pressed by Rep. Barbara Marumoto on possible tax increase proposals, Young said, “I can’t stand before you and say definitely no or definitely yes. Just given the order of magnitude of what we are looking at, several options would have to be explored,” he said.

The state is in the middle year of a two-year budget cycle, and lower-than-expected predictions for tax revenues released last week have caused the state to estimate a $19 million shortfall by end of the 2013 fiscal year, Young said.

“I do believe that (shortfall) can be accommodated through administrative measures or restrictions on appropriated budgets. I don’t think we need to be overly concerned about raising taxes or severely cutting programs,” Young told legislators.

But ever-increasing deficits after that, culminating with $312 million in red ink in fiscal year ’17, are very worrisome, said Young.

The administration is working on a plan to address the problem, he said.

Young said budget plans at this point don’t address billions of dollars in liabilities that will be owed by funds that pay pension and health care benefits for state workers.

The amount of money the state would have to contribute annually to reduce those deficits “is very large” and the state budget “currently couldn’t support that,” said Young.

Legislation was passed last year and more will be proposed this year that will reduce future benefit levels for newly-hired employees, he noted.

For the short term, Young said, “It’s prudent, its okay and appropriate to see if  those measures can provide some traction in reducing those liabilities without actually hard-funding dollars,” the budget chief said.