HONOLULU, March 15, 2017 >> A new study by the Grassroot Institute of Hawaii shows that Gov. David Ige’s proposed budget will run out of money within the next two years.
According to the analysis, the governor’s current budget will overspend by $292 million next year, leading to an era of unbalanced budgets and deficit spending.
Ige’s spending plan understates four significant cost items:
- Increased payments for unfunded liabilities
- Decreased tax revenue projections
- Increased payments for public union salary increases
- Historic spending trends
Keli’i Akina, Ph.D., Grassroot Institute of Hawaii president, said, “When adjusted for accurate costs, Gov. Ige’s budget is saddled with a $104 million deficit in fiscal 2019, which grows to a $756 million deficit in fiscal 2022. The state’s proposed reckless spending could put public retirees in danger of losing their promised benefits and put all citizens on the hook if the government decides to raise taxes to avert financial meltdown.”
The report shows that:
- The state recently lost $258 million in expected tax revenues for fiscal 2017.
- Ige’s $220 million in spending reductions still lead to $292 million in overspending in fiscal 2018.
- Ige’s current spending plan underestimates future spending by $248 million in fiscal 2020.
- The governor has not yet budgeted for increased payments due for Hawaii’s $12 billion unfunded liability for public pensions.
- Public union salary increases are also absent from the current spending plan.
- The state needs to cut back immediately in order to prevent a future financial crisis.
Akina continued, “State lawmakers must include accurate costs when planning for the future. This would help lawmakers balance the state budget and ensure that Hawaii has a healthy rainy day fund to weather any economic setbacks.”
Download the full report below: