It is for these reasons that we have now turned a fiscal corner. As of July 1, 2013, the 5 percent pay reductions will end for state workers, and full pay will be restored.
Good faith collective bargaining negotiations are essential if we are move toward a resolution that is fair to everyone. Fair to our employees who create public value every day, fair to our taxpayers,
and fair to future generations.

Tourism numbers and profits are on a steady rise, construction is vigorous and growing and unemployment is back down to the low rates that we enjoyed before the recession.

The recent bond sale of more than $800 million, along with historic low interest rates at 2.6 percent, is a positive indicator that the bond raters, the marketplace and its investors, consider Hawaii’s fiscal condition to be sound.

The question is, will we continue to invest in the economy via construction and repair/maintenance projects and public private ventures. Not only is this important to ensure that communities, schools and our residents continue to have much needed infrastructure, buildings and improvements, but we can do so at historic low interests rates, saving the state millions of dollars in debt service. More importantly, these projects could mean that the state not only will be investing back into our economy, but through partnerships generate needed revenue not otherwise available. I have asked Lt. Governor Shan Tsutsui to take a lead role in working to expedite addressing this opportunity.

I welcome the new Lieutenant Governor here today as my partner. Formerly President of the Hawaii State Senate, he is a valued addition to this Administration. He is exactly the sort of young and able public servant/leader that Hawaii needs. He is taking the place of another young and capable leader, Brian Schatz, our new Senior United States Senator. Senator Schatz joins a congressional team with our vigorous senior Representative Colleen Hanabusa in the House of Representatives and Senator Akaka’s dedicated and committed successor, Senator Maize Hirono. A team that for the first time in the fifty-three year history of the State of Hawaii, will not have Senator Daniel Inouye at its helm. For many of us, we have never known a time when Senator Inouye was not the center of our political life. But while his physical presence may no longer be with us, the spirit of his example of public service sets an unmatched standard we can only aspire toward. Senator Schatz joins another young leader in Congress -Tulsi Gabbard, like Senator Inouye a war veteran - but of this generation. With these bright and energetic young people, Hawaii looks to its future.

They understand we can only continue to get good bond ratings and sell them at record low rates by continuing to practice sound fiscal management. As such, a primary budgetary priority is to recapitalize the Hawaii Hurricane Relief Fund and the Rainy Day Fund. When my administration began, we were forced to borrow from both the Hurricane Relief Fund and the Rainy Day Fund. Now that our fiscal house is in order, it’s time to pay back those debts. Bond raters look to these reserves, and the levels to which they have been restored. Therefore, to keep our favorable ratings and attract investors, we must recapitalize these funds.

But, we must also deal with the question of the looming cloud of current liability obligations that have not been paid for and that will wreak havoc upon our state’s future fiscal stability. During the last few years of the recession while staring in the face of obligations to retirees, other states and cities nationwide have blinked and have either slashed retirement benefits that were previously earned or declared bankruptcy. That is why I am asking the Legislature to start paying toward our Other Post-Employment Benefits. This is the “OPEB” debt.
To pay down this liability would require the state to put up more than $500 million every year for 30 years. This is a number impossible to meet all at once. I am therefore proposing to address this liability by budgeting $100 million starting this next fiscal year, with plans to continue to pursue payment in coming years.

Next, the question of energy. When we consider long-term financial stability and talk about controlling our own destiny, energy is at the top of the list.

Two weeks ago today, Tesoro Corporation announced it would be closing its refinery here in Hawaii.
That means about 200 people will soon be out of work. Our Department of Labor and Industrial Relations stands ready to assist with job assistance for those who need it.

It also means that Hawaii only has one refinery to process oil for our state’s energy needs, and that we will be importing the rest of our fuel. We face greater exposure to the events occurring elsewhere in the world that affect our fuel pipeline – whether in the Middle East, Asia, on the seas, or at Mainland refineries and ports.