No New Taxes Proposed by Gov. Abercrombie in Budget Proposal, but Governor Could Still Support Legislative Tax Proposals

Budget director Kalbert Young with Gov. Neil Abercrombie
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Gov. Neil Abercrombie with State Budget & Finance Director Kalbert Young (photo by Mel Ah Ching Productions)

“This is a balanced budget with no tax increases – how’s that for a great opening line.”

Those were the first words from Gov. Neil Abercrombie yesterday when he unveiled his $188 million supplemental budget request for FY 2013 to state lawmakers.


If lawmakers approve the governor’s plan, the increase will bring the total state annual operating budget to $11.1 billion.

The governor said under this new budget, there will be no furloughs or employee cutbacks in FY 13 and no additional cuts to social welfare programs.

This is in sharp contrast to the 2011 legislative session, when lawmakers had to make up a $1.3 billion shortfall by increasing taxes by $600 million and cutting social welfare programs.

While the governor emphasized there are new taxes in his budget for next year, it doesn’t mean he isn’t supportive of the idea of more tax hikes.

If lawmakers ask him to approve tax increases to fund environmental, health or education programs, he is enthusiastic.

The governor wouldn’t say yesterday whether or not he’ll continue his push for a new tax on sugar drinks, like sodas, to fund childhood obesity and education programs.

The state budget is based on an assessment by the state Council on Revenues the state’s economy will grow by 14.5 percent in FY 2012 and 6.5 percent in FY 2013.

But with families all around the state still struggling financially, what happens if the council’s projections are incorrect?

Kalbert Young, state Budget and Finance Director, said yesterday even if the growth projection is as low as 13 percent, the budget will be balanced. Anything higher, there will be a surplus to carry over into the next fiscal year. Anything lower, and adjustments would have to be made.

Young also said under this plan, the state’s Hurricane Rainy Day Fund and Rainy Day Fund would be replenished by $75 million in the next fiscal year, and within the next two years, restored to pre 2010 levels for a total of $174 million. Lawmakers raided these special funds last year to make up for a budget shortfall.

The governor also wants to spend another $1.2 billion on capital improvement projects for fiscal year 2013, which brings the total CIP spending to $2.2 billion. Part of that will be financed with an additional $300 million in bond sales. The state just announced days ago it had issued a record $800 million in General Obligation Bonds for capital projects.

The governor’s budget has to be approved by the state legislature, which opens on Wednesday, January 18, and runs through May.





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