The Hawaii state budget figures show a record high surplus of over $1 billion in 2016. Look at all of the extra money!
However, Governor David Ige said he already spent the surplus. How could this be?
The graph above is a snapshot of the budget taken in July of 2016. But the Governor said that most of the money was spent after the snapshot was taken.
So, where did the surplus go?
Most of the money was used to make catch-up payments into the state’s $11 billion unfunded liabilities for state health benefits.
Normally, the unfunded liabilities are paid in quarterly installments throughout the year, like paying off a credit card a little at a time. But last July, Governor Ige put $725 million into the Employer Union Trust Fund in one lump sum, to help make payments early.
Governor Ige also put $201 million into a rainy day emergency fund, just in case the state faces hard financial times in the future.
Saving money for the future and paying off debt is a good idea, especially during surplus years. Governor Ige and his team have successfully taken a step towards fiscal health and accountability for Hawaii.
However, public employee unions who were wishing for bigger pay raises may need to dial back on expectations, now that that extra money is all gone. Still, all is not lost as Governor Ige has said that he has planned a 1 percent pay raise for public employee union workers.
So the government surplus may have already been spent, but at least it was spent wisely. If Governor Ige and the state continue to work together, we may be able to keep our economy healthy and keep the state’s finances in order without raising taxes.