The state House of Representatives was unanimous in passing a $6.25 billion supplemental operating budget Wednesday, one day after the Council on Revenues revised the state's projected economic growth from 3.3 percent to zero for the current fiscal year. Coupled with the $787.5 million capital improvements budget, the House cut about $180 million from Gov. Neil Abercrombie's supplemental budget request issued in December.
Finance chair Rep. Sylvia Luke said if the House had passed Abercrombie's spending plan as is, the state would run a deficit of $118 million. When taking all means of financing into account, the supplemental budget for the upcoming fiscal year reaches $12.15 billion.
"We were able to pass the budget today with a surplus of $68 million," said Luke. "In addition to that, there's close to about $120 million in reserves, which is the hurricane relief fund and the rainy day fund."
During January's State of the State address, Abercrombie touted an $844 million surplus, which was accumulated as of last June. But with the revised economic forecast and collective bargaining pay raises, that surplus is all but gone.
Still, the governor says there's no reason to panic. The zero percent growth predicted for the current fiscal year should be followed by 5.5 percent growth in fiscal year 2015, which begins July 1.
"We've had a peak economy and we've had peak revenues coming in, so when the forecast says that the revenues will be flat…what they mean is the peak isn't rising even further," Abercrombie said during a Wednesday news conference.
State Budget Director Kalbert Young said because of the compounding effect of lower tax revenues, the state will have about $480 million less to spend in the biennium. He and the governor plan to meet with lawmakers to adjust their spending requests for the supplemental budget, but are still in the process of determining priorities.
"The revenue projections just came out…so we want to see how that would affect anything that we've been putting forward, not just with initiatives, but with the entire budget," said Abercrombie.
The governor commended Luke for passage of the budget bill, and said the executive branch and the House are in agreement when it comes to unfunded liabilities. Both the governor's spending plan and the one passed by the House sets aside $100 million toward health benefits for state workers. By fiscal year 2019, those payments are mandated to reach $500 million under state law.
"We will be working with the legislature to evaluate priorities, to make sure that the budget stays balanced, that the revenues coming in are taken into account in a balanced way, and that we look forward to sustaining the growth of the economy and sustaining our fiscal management in the years to come," said Abercrombie.