MEDIA RELEASE

Gov. Neil Abercrombie will submit his administration’s budget on Tuesday to the State Legislature with the goals of speeding up Hawaii’s economic recovery, moving the state toward the priorities outlined in his New Day plan, and restoring basic government functions.

Hawaii can achieve these goals and regain its financial health in spite of an $844 million deficit by reorganizing government services, leveraging state dollars for federal and private dollars, reducing programs with no funding service, facing up to difficult long-term fiscal challenges, and focusing on our near-term economic recovery.

“The times are challenging, but that is no excuse for standing still,” Abercrombie said. “Our administration is moving in the new direction that the people of Hawaii have and are calling for. This budget makes the best use of our limited resources.”

Abercrombie forwarded the initial version of the state’s budget Dec. 20, 2010. The following is the updated budget that reflects changes made by the Abercrombie Administration:

Total Operating Budget: The total operating budget of the state will be $22.7 billion over the next two fiscal years.

* FY 2012 – $11.4 billion
* FY 2013 – $11.3 billion

Operating Budget, Expenditure of Only General Funds:

* FY 2012 – $5.7 billion
* FY 2013 – $5.9 billion

New Day Work Projects: The Abercrombie Administration budget will invest $2.7 billion into capital improvement projects over the new two fiscal years.

* FY 2012 – $1.7 billion
* FY 2013 – $989 million

Abercrombie outlined the three essential goals when developing the state’s budget:

1. Restoring a Functioning Government. Every department is focusing on areas most critical to providing basic services and most necessary for advancing economic recovery.

2. Speeding Up Economic Recovery. As a part of the New Day Work Projects, all departments looked for capital improvement projects that were ready to go and could be completed in two years.

3. Reorienting to New Day Priorities. All agencies are restructuring themselves to focus on investing in human capital and building a sustainable economy.

“When our administration took office, we immediately began a daunting task of salvaging what we could from an administration with a fundamentally different view of the proper roles and responsibilities of government,” Abercrombie said.

“In all instances, we are not yet able to fully restore government function, but this budget restarts each agency focusing on providing basic services as we continue to repair the public’s trust in government,” he said.

Examples of Abercrombie’s budget proposals include:

* Rebuilding the agricultural inspection system to prevent the introduction of invasive species that damage our environment and agricultural industry; and providing basic capacity to the Division of Conservation and Resources Enforcement.

* Restoring critical data system operations and finally establishing an office of the Chief Information Officer; a move that will save taxpayers millions of dollars and improve the capacity of public workers and the private sector to accelerate services and business activity.

* Rebuilding Hawaii’s occupational safety and health program, the historic preservation division, the Hawaii film office, and other critical government functions that have a direct impact on business activity.

Abercrombie’s financial plan includes a combination of repealing tax exemptions, making the current tax code fairer, addressing unfunded retirement and health liabilities and pulling back on social services for which there has been no funding source.

“As this plan has been put forward, some are reverting to the familiar approach of recent years: confrontation, denunciation, accusations,” Abercrombie said. “We must not be afraid to do that which is politically difficult nor look to blame government for our problems instead of taking ownership to create solutions. This is the unacceptable status quo. Our administration will not shy away from difficult choices or use gimmicks to mask our problems.”

Abercrombie’s Announcement of the Executive Branch Budget In Full

“Changing Our Ways,” Governor Abercrombie’s Announcement of the Executive Branch Budget, Feb. 21, 2011

Today we are presenting our budget to the legislature and the people of Hawaii. It is the product of a great team effort by many public employees working literally days and nights to complete it. When our administration took office about 100 days ago, they immediately began a daunting task—first to salvage what we could of the wreckage left from an administration with a fundamentally different view of the proper roles and responsibilities of government.

All departments were tasked to identify the most broken parts of their agencies, to begin developing new working habits under new leadership, and to implement new policies making the best use of limited resources. In the end, all contributed to the development of a factual, clearly delineated, comprehensive budget plan for the legislature.

This budget is a direct reflection of the magnitude of the challenge facing the people of Hawaii. Our margin for error is razor thin. In the face of an $800 million plus deficit which must be balanced, and enormous unfunded liabilities that have been ignored for too long, we must still achieve three essential goals to secure Hawaii’s future:

* To restore the functions government beginning with the most basic public needs.
* To accelerate our economic recovery with immediate jobs and opportunities.
* To reorient our entire government toward the priorities outlined in the New Day plan—investing in human capital and building a sustainable economy.

Restoring a Functioning Government

In recent years, the public trust has been badly damaged by personnel and programmatic policies that crippled government’s ability to provide the basic services taxpayers expect. We have begun the process of remedying this by making use of idle federal funds, reorganizing departments around public service needs, changing arbitrary rules, and growing the morale of public employees by reaching out to them, listening and acting on their suggestions and initiatives. The result: increasing efficiency and productivity.

The budget now before the Legislature further advances this objective. In all instances, we are not yet able to fully restore government function, but this budget restarts each agency focusing on those areas that are the most critical, most cost effective, most necessary for advancing economic recovery, and most important for the health and safety of our residents and our islands.

Examples:

* Rebuilding the agricultural inspection system to prevent the introduction of invasive species that damage our environment and agricultural industry; and providing basic capacity to the Division of Conservation and Resources Enforcement.
* Restoring critical data system operations and finally establishing an office of the Chief Information Officer; a move that will save taxpayers millions of dollars and improve the capacity of public workers and the private sector to accelerate services and business activity
* Strengthening emergency management resources at state Civil Defense and funding the dam safety program of the Department of Land and Natural Resources
* Adding needed resources to the PUC and Consumer Advocate to move the clean energy agenda
* Restoring contracted nursing services for special needs students and transportation services for our school communities
* Restoring the Procurement Office to increase transparency and efficiency in government spending
* Rebuilding Hawaii’s occupational safety and health program, the historic preservation division, the Hawaii film office, and other critical government functions that have a direct impact on business activity

Speeding Up Economic Recovery

By the end of this biennium, Hawaii will emerge from our budget dilemma only if we take the steps necessary to jumpstart our economic recovery. My budget calls for nearly $1.7 billion by all means of financing—including federal funds, special funds and general obligation bonds—for capital improvement projects that will immediately create jobs and inject needed dollars into the economy. This will benefit everyone.

All departments were instructed to look for projects that were ready to go and that could be completed in two years so that they could be prime movers in attacking the recession. These projects focus on building a vital infrastructure that will advance a sustainable economy built on the strength of our human capital as well.

We are also going to leverage state funds in ways that can bring in large federal matching funds and establish private-public partnerships. These federal and private dollars are crucial to our recovery. Until now, we have let too many opportunities in these areas pass us by.

Examples:

* Key irrigation and watershed improvement projects necessary to build our future food security
* Federal matching funds in excess of $90 million for improvements to veterans’ facilities
* Ready-to-build Rental Housing Trust Fund projects and a new elderly affordable rental project
* Over $70 million in infrastructure improvements on Hawaiian Homelands
* Renovation of the Foreign Trade Zone Import-Export Step-up Incubator to develop more business opportunities
* Accessing federal matching funds to develop electronic medical records in the state health system
* Accessing a 9 to 1 federal funding match for a computer-based eligibility system for MedQUEST
* Energy efficiency improvements in state buildings to help move us toward our clean energy goals and save taxpayer dollars along the way
* Overdue improvements to our public housing projects, state parks, harbors, airports and highways

Reorienting to New Day Priorities

All government agencies are reorienting themselves to the New Day agenda I presented back in August 2010. The specifics of the plan may alter with time and circumstance, but there is no question about the vision that the people of Hawaii want pursued—energy independence, food security, educational excellence, environmental sustainability, good jobs for future generations, access to quality health care, strong locally owned small businesses, services that help people help themselves out of poverty and homelessness, empowerment and care for our elderly, close-knit communities with a strong sense of culture and diversity.

The times are challenging, but that is no excuse for standing still. Our administration is moving in the new direction that the people of Hawaii have and are calling for. This budget makes the best use of our limited resources.

Examples:

* The largest share of new investments are going into education: early childhood, public schools, and the University of Hawaii
* Funding the Early Learning Council, the Preschools Open Doors Program, and early childhood health programs including dedicated revenues from a sugary beverage tax and increasing the alcohol tax
* Extending small business assistance to communities, expanding Hawaii Small Business Innovation Research Grants and making improvements to the state procurement system
* Proper funding of the state energy office to make greater progress in energy conservation and the deployment of clean energy systems
* Additional investments in our state parks, and culture and the arts by reallocating funds from the Transient Accommodations Tax.

Our financial plan, our legislative proposals and this budget were developed in accordance with a number of key principles:

* It has to be fair with everyone contributing something.
* It has to be sensitive to the needs of those taxpayers with the least ability to pay.
* It has to create an infusion of support for the overall economy so we can continue to recover.

We will not shy away from difficult choices or use gimmicks to mask our problems.

Our proposal requires a combination of repealing tax exemptions, making the current tax code more fair, addressing unfunded retirement and health liabilities, and pulling back on those social services for which there has been no funding source.

We’ve also set the table for a new era of negotiations with public unions, clearing the decks of as many past grievances as possible and treating our public unions with honesty, respect and fairness as we face this budgetary challenge together.

Understandably, as this plan has been put forward, some are reverting to the familiar approach of recent years: confrontation, denunciation, accusations. They are afraid to touch that which is politically difficult, defend narrow self-interests at the expense of our society as a whole, look to blame government for all our problems instead of taking ownership to create solutions. Too many suggest that we can get something without any sacrifice, and if there is to be sacrifice, that someone else do it.

This is the unacceptable status quo, and this is what the people of Hawaii want changed.

There is no one left to blame, no one else to carry the load for us, no more time to push problems down the road for someone else to solve. The time for stalling has run out.

Our administration will not avoid making the hard choices. A great many people in our administration—public servants who love Hawaii dearly—have put their collective efforts behind this plan that does what needs to be done.

We invite new ideas and modifications to this plan. If there are better ways to get to where we need to go and that address our multi-dimensional challenges with thoughtful conviction, we are happy, indeed eager to entertain them.

But we cannot tolerate unnecessary delay or drama for the sake of advancing personal agendas or because we lack enough civic courage. We cannot keep looking for the worst in each other. It is a disservice to ourselves and to the people of Hawaii.

We need to listen to the people outside the halls of the Capitol — the silent majority that is ready for determined leadership; the voters who chose change over the status quo.

Now is the time for us to make our mark; to show our character; to be responsible. Hawaii will be what we make it. Let’s expect more of ourselves. Let’s get to work.