MEDIA RELEASE

In the face of an $800 million-plus deficit, Gov. Neil Abercrombie submitted his administration’s budget with three essential goals: (1) restoring basic government functions; (2) accelerating Hawaii’s economic recovery with immediate job creation; and (3) reorienting government toward priorities outlined in his “New Day in Hawaii” plan to invest in human capital and build a sustainable economy.

Some have criticized the Abercrombie Budget Plan for what has been characterized as “new” or “additional” spending while the state faces a large deficit. However, as illustrated in the budget breakdown visual below, the majority of the adjustments made in the Abercrombie Budget Plan for Fiscal Year 2012 are required expenses.

Below is a breakdown of 2012 adjustments, including spending that: is required; restores critical government services; provides temporary assistance for needy families; provides infrastructure repairs and maintenance; and invests in human capital and a sustainable economy.

REQUIRED SPENDING

The majority of the adjustments made in the Abercrombie Administration Budget for Fiscal Year 2012 are required expenses.

This includes:

* Unemployment Insurance: $262 million in special funds to provide extended benefits to unemployed workers.

* Public employees benefits: $54 million for the public workers health care and retirement funds.

* Compact of Free Association migrants: $26.5 million to restore services as required by court order for citizens from the Republic of the Marshall Islands, Republic of Palau and Federal States of Micronesia.

* Interest payment on bonds: $828,000 on interest on state bonds.
Dam safety: $1 million

RESTORING CRITICAL GOVERNMENT SERVICES

In recent years, government has been cut to a level that has crippled the ability to provide basic services that taxpayers expect. Abercrombie’s budget begins restoring positions that are the most critical, most cost-effective and most necessary for advancing our economy recovery including:

* Restoring positions at the State Historic Preservation Division that will accelerate the permitting process and will improve the life of Hawaii’s building industry

* Rebuilding the agricultural inspection system to prevent invasive species from damaging our environment and agricultural industry

* Restoring the Procurement Office to increase transparency and efficiency in government spending

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES

The budget provides $49.5 million for Temporary Assistance for Needy Families, services for Hawaii’s most needy residents.

INFRASTRUCTURE MAINTENANCE

The budget provides $22 million in necessary repair and maintenance for the state’s highways.

MOVING TOWARD A NEW DAY IN HAWAII

All departments are reorienting themselves to focus on Abercrombie’s priorities outlined in “A New Day in Hawaii” to invest in human capital and build a sustainable economy.

His priorities include:

* Education: $14 million for student transportation, nursing services for special needs students, new textbooks and instructional tools, a fund to give greater access for communities to use school facilities, athletics program and tuition assistance for Hawaii National Guard

* Early Childhood: $5.5 million total including $3.2 million for Pre-School Open Doors program and $250,000 to fund the Early Learning Council

* Energy: $5.7 million to add needed resources to the Public Utilities Commission and Consumer Advocate to move forward the clean energy agenda

* Agriculture: $93,280 for the state’s irrigation revolving fund

* Culture and Arts: $4.35 million in grants and additional funding for the State Foundation on Culture and Arts

* Native Hawaiians: $5.7 million for increased support for Native Hawaiians

* Environment: $358,197 in a Clean Air Grant from the federal government

* Small Business: $260,000 in Hawaii Small Business Innovation Research grants

* Social Services: $4.1 million in increased federal funds for the Department of Human Services

* State Parks: $5 million to invest in the repair and maintenance of our state parks

* Veterans: $5.4 million for the maintenance of veteran cemeteries

What are the GOALS of the plan?

Besides balancing an $800+ million deficit, it achieves three crucial goals:

* Repairs government. Restoring a functioning government beginning with critical basic services

* Creates jobs. Accelerating the economic recovery with smart capital improvement projects and other investments

* Moves toward the New Day. Reorienting government toward the New Day plan – clean energy, food security, small business development, and investing in education, health, and other aspects of our human capital

What are the GUIDING PRINCIPLES of the plan?

* Focus on critical health, safety, and economic needs first

* Advance our economic recovery

* Face up to our problems–no gimmicks that mask the issues

* Ensure that any burdens are reasonable and shared

* Be sensitive to those with the least ability to contribute

Why did it take so long to produce the budget?

To get it done right, the governor wanted his new leadership team to have enough time to carefully assess the priorities and needs, think through options thoughtfully, and develop a plan that was comprehensive.

Is the governor open to modifications to the plan or other ideas?

Yes, as long as they adhere to the guiding principles and accomplish the three goals. Ideas that just push burdens on others to protect a narrow interest are unacceptable.

Why is the governor proposing to … stop certain tax exemptions … pull back on services … seek concessions from public employees … reallocate funding … etc?

Look carefully at the whole plan … The governor calls on everyone to make reasonable sacrifices instead of placing the entire burden on just a few. He is being upfront with people about what it will take to emerge from our current challenge. If we work together, we will overcome the deficit and move forward.

Why does the budget call for some spending increases?

Because people want a government that works. The status quo is a government that is underfunded, unresponsive and incapable of critical functions. The public knows this; they experience this frustration every day and they want it fixed. But they also need to be able to trust that their tax dollars are being spent responsibly and that they are getting the value they expect.

Right now, government is incapable of doing many of the basics: educating children, providing basic services to the most vulnerable populations, getting business permits out in a timely fashion, fighting against invasive species that will damage our environment, maintaining safe highways and harbors. Government must earn back the public trust.

Aren’t some of the governor’s proposals already dead in the legislature?

Nothing is dead. The governor’s plan is a comprehensive package: adequate funds for government to do the basics, spreading the burdens so that everyone participates, protecting taxpayers with lower incomes, making long-term fixes to address long-term liabilities that have been ignored too long. If individual parts of the plan are set aside, something else must take their place that will make the entire approach fair and responsible.

Is the governor open to raising the general excise tax (GET)?

Raising the GET was not part of the governor’s plan for a reason – it is regressive and it can put a drag on the economy right at a time when we need to boost it. However, the governor is of course open minded and will look at proposals that the legislature puts forward.

What are examples of RESTORING GOVERNMENT in the governor’s budget?

The budget plan begins the process of restoring government services back to what taxpayers expect. Departments were asked to look at the most critical functions first and think of cost effective ways to serve the public.

For example:

* 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

What are examples of ECONOMIC RECOVERY in the governor’s budget?

The budget plan leverages state funds and its bonding power to focus on investments and projects that are ready to go now and will be completed in a time frame to have maximum positive impact on the economy.

For example:

* 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

What are examples of NEW DAY PRIORITIES in the governor’s budget?

The budget plan calls on each department to reorient their activities toward the pursuit of the vision laid out in the governor’s New Day plan. This includes a focus on clean energy, food security, small business development, environmental sustainability, and investments in human capital including health and education at all levels.

For example:

* 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.

— Find out more:
http://hawaii.gov/budget/bienniumbudget/budgetinbrief