Gov. Neil Abercrombie today announced that the State of Hawaii ended fiscal year 2013 with a positive fund balance of $844 million. The state's positive balance marks a $1.1 billion turn-around since the Governor took office.
The announcement was made before a group of business executives at a Chamber of Commerce of Hawaii luncheon where he and Finance Director Kalbert Young outlined the state's fiscal situation and economic outlook. (View the presentation, "Hawaii's Fiscal and Financial Condition," here.)
In 2011, the state experienced a $220 million shortfall, leaving it with crippled government programs, furloughs, and poor reserve levels and balances. Through difficult but necessary financial control measures implemented by the Abercrombie Administration in fiscal years 2011, 2012 and 2013, the state gradually increased its ending balances every year since the start of the administration. By carefully managing the state's financial resources, affordable and sustainable contracts were negotiated with the majority of public workers. The state was also able to recapitalize reserves for the rainy day and hurricane relief funds in the amount of $211 million, and critical government services like agricultural inspections are being restored.
Furthermore, $1.2 billion was expended in fiscal year 2013 for priority capital improvement projects that invest in state infrastructure and facilities while serving to strengthen the local economy and generate job opportunities (another $2.2 billion has been appropriated for fiscal year 2014). As of October 2013, Hawaii's unemployment rate is 4.4 percent, one of the lowest in the United States, compared with the national unemployment rate of 7.3 percent.
"We have worked diligently to stabilize and grow our economy and fiscal situation during my first three years of office," Gov. Abercrombie said. "With additional state revenues and a positive economic outlook, we are now in a better situation to address key social and community issues like early education, environmental protection, homelessness and support for our seniors. Only with a strong economy and sound financial management can we adequately address these important issues, which require significant resources in addition to the will to do so."
Recently, institutional and retail investors responded favorably to the State of Hawaii's 2013 general obligation bond sale, the result of confidence in the Hawaii economy and the Abercrombie Administration's management of the state budget. On Nov. 21, 2013, the state successfully completed the sale of $860 million of tax-exempt and taxable general obligation bonds. Standard and Poor's stated the following as part of the Hawaii's 2013 credit evaluation:
"Due in large part to the state's current and projected fiscal position, as well as its recently formalized commitment to addressing its retirement liabilities, we see Hawaii's credit quality poised to strengthen."
Director Young added: "This year's successful bond sale is the latest reflection of investor confidence in the State of Hawaii.
"The better things get, the shorter memories sometimes become. Just three years ago, our state had a less than favorable rating and faced a dire financial situation. We have accomplished much in a short period of time. The difficult decisions we made are now paying off.
"We will continue to responsibly manage the state's fiscal affairs in order to grow our economy and provide quality government services to the people of Hawaii."