Gov. Neil Abercrombie proposed a supplemental budget proposal for the second year of the state?s two-year budget cycle Monday that includes no new taxes.

"We have been able to turn this situation completely around," said Abercrombie, noting that he now predicts a surplus when the state faced a budget shortfall of hundreds of millions of dollars when he took office a little more than one year ago.

Abercrombie and State Budget Director Kalbert Young said because of new, lower-salary contracts with public unions, the state is saving about $60 million, since it's spending less on employee retirement and health benefits. New public worker contracts have increased employees? health care contributions so they split health insurance premiums 50-50 with the state.

The state was also able to save about $25 million in part by refinancing bonds, Young said.

"One year ago, the sentiment and overall tenor of the state economy and the state financial condition was considerably different than the one that we're heading into the next legislative session," Young said.

So the governor wants to fully restore about $174 million to both the Hurricane Relief and Rainy Day funds, funds used by lawmakers during the last session to help balance the budget.

"We'll not only balance the budget, we'll not have to have tax increases, but we'll be able to make some investments in our new day program and some initiatives that we all want to see achieved," Abercrombie said.

Abercrombie wants to restore about $46 million worth of cuts in services for the poor ? money for food stamps, Medicaid and Child Protective Services.

"But it doesn't represent a full restoration to its peak," Young said, estimating the proposal would bring back about 40 percent of the human services cuts made since 2010.

"If we stay on course, then we'll be restoring services that perhaps we would have liked to have done a little sooner, when we can," Abercrombie said.