State Set To Go Bust Unless Major Changes Are Made In 2015.

From the Hawaii State Senate Minority Office: 808 586-6780

Budget-Deficit

Senator Sam Slom has serious concerns about the state of Hawaii’s finances. Slom said today “The recent Council on Revenues downgrading forecast indicates Hawaii is in a much worse position than what was anticipated. Hawaii is set to go bust in 2016 unless the new Governor and the Legislature make some serious cuts.”

“Senate Minority Research (attached) shows that, based on revenue forecasts, if the State continues to spend at the current rate Hawaii will use up its general fund carryover balances as early as 2016. The small 10% of department funds withheld this year by the Governor’s office will not be enough to stop the freefall as it is just a drop in the bucket ($14m) in a 6+ billion dollar state budget.” says Slom.

Senator Slom adds “Because the State is not constitutionally permitted to borrow from outside sources for operating expenditures, it is likely the State will tap into the Emergency Budget Reserve Fund and Hurricane Relief Fund.[1] Those funds are not large so that will be a small band aid for the problem and will not address the problem of overspending for long. The State and the Legislature will have their work cut out for them to deal with this mess resulting from kicking the can down the road for so many years. The final option to deal with the problem by raising taxes is the least desirable and burdensome for the people because we are already one of the highest taxing states in the nation.”

Attached to this release is the Senate Minority Research Office Article “The Implications of the Council on Revenues General Fund Forecast: What happened to the $844 m surplus?” by Paul Harleman, Budget Director, Senate Minority Research Office, September 15, 2014.

Note: for any clarification or questions pertaining to the financial analysis call Paul Harleman, Budget Director, Senate Minority Research Office 586-6988. Email: p.harleman@capitol.hawaii.gov.

Documents

Press Release 9-17-2014 (PDF)

Report:  The Implications Of The Council On Revenues General Fund Forecast: What Happened To The $844 Million Surplus? (PDF 975k)

Rail Project re-bid is Intended to Create an Illusion of Lower Costs

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From the Hawaii State Senate Minority Office: 808 586-6780

Senator Sam Slom does not believe that dividing the building of nine transit stations into three smaller bid projects is intended to lower costs.[1] Slom said today “The fact that HART is breaking this contract up into three projects of three transit stations each is just a way of creating the illusion of lesser costs. It is not likely to lower costs. Everyone knows if you buy in bulk your unit cost is lower, and the less items you buy the more the unit cost grows. If the project is $110 million more buying bulk, how much more do you think it is going to be buying 3 at a time?”

“The way HART is releasing the information makes it sound like they are doing the public a favor. What this reveals is the rail plan was too optimistic, or the bids and tenders were poorly managed. For a project of this scale the public deserves transparency and honesty. The Senate Minority will continue to strip away the spin and act as the voice for our taxpayers.” says Slom.

Senator Slom adds “It is not too late to cancel the project and cut our losses. That is, in fact, what I would urge the county to do. This is just the start of blowout costs and delays. The cost doesn’t just encompass money, but also a loss of 1500 parking spaces at Aloha Stadium, the destruction of dozens of small businesses, and extended periods of traffic congestion and major road works. The longer the disarray, the more effect on tourism, trade and the community. And who really wants to see a rail along our beautiful waterline?”

[1] http://www.hawaiinewsnow.com/story/26491482/rail-project-initial-opening-delayed-1-year-as-hart-cancels-station-bids

Additional Commentary from Senator Slom on KHVH Radio 830 AM.

 

 

Voting Issues Scrutinized at Election Commission Meeting

Published to the Hawaii Kai NHB #1 Report  for August 26, 2014.

Testifying at Elections Commission Meeting

The Hawaii State Elections Commission held its post-primary meeting last Friday, August 22 before a packed crowd at the State Office Tower. Chief Elections Officer (CEO) Scott Nago was on the hot seat as a the commission reviewed procedures and troubling issues surrounding this year’s primary election. The public also presented oral and written testimony.

I asked the commission to replace the CEO (as I had in 2012) and fix election procedures to make sure that the integrity of the process can improve by the November 4 general election.

Among the issues that came up in the primary election:

Change of make-up election from a mail-in process to a walk in process at the last minute on the Island of Hawaii after 2 precincts in the Puna district were closed on election day.

Late count of 800 “Discovered” Maui ballots from Hana.

Notification of the make-up election process on the Big Island.

No accountability for past and present errors in the election process by the Chief Elections Officer.

Wrong ballots delivered to precincts in 2012.

No plan B in case of natural or manmade disasters.

Vote counts prematurely released before voting was done.

After the commission met in executive session, it was noted that the Elections Office would be reviewing their procedures.

Senator Slom’s Testimony (PDF Link – August 22, 2014)

Chief Elections Officer’s Report – (PDF – August 21, 2014)

Photo: Senator Slom testified at the Election Commission meeting.

2014 April GET Collections Still Down Compared to 2013

Senator Sam Slom continues to urge spending restraints because of the slow recovery of the state and national economies.

The 2014 April General Excise Tax (GET) collections are still down compared to the same month last year, although slightly improved on March 2014.

GET-8-2014The USA national Gross Domestic Product (GDP) numbers for Quarter 2 are up 4% in comparison to Quarter 1[2], although on an annual basis the GDP numbers for 2014 are relatively low at around 1.1%.

Senator Slom explains “For the short term, it indicates that both the state and national economies are somewhat improving, however, the improvement is only on a quarter-to-quarter basis. This does support that there is only a very slow recovery going on for Hawaii and the nation. Hawaii needs to be frugal in its spending of taxpayers’ monies, as the economy is very fragile at this moment, and both the state and the nation are cash poor.”

“To ride this slow ride out of recession, Hawaii needs to put away some cash reserves, just like our everyday families do. At this time, as the Hawaii Senate Minority has previously indicated, Hawaii is due run out of cash reserves somewhere between 2017-19 if no significant changes are made in cutting costs (or raising revenue), possibly resulting in a constitutional crisis of the unbalancing of Hawaii’s budget.”

Hawaii’s Downward Spiral Of State Tax Collections Is Alarming

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According to the recently released Department of Taxation’s monthly tax collection reports[1], the general excise tax collections for the first quarter of 2014 are down 4.6% in comparison to last year. To make matters worse, the Federal Bureau of Economic Analysis[2] recently downgraded its -1% estimate of real gross domestic product for the first quarter of 2014 to -2.9%, which is, by far, the worst quarter since the recovery began in mid-2009.

Figures-2014-07-09

The Senate Minority is pleased that the Abercrombie Administration has finally taken a step to curb a portion of the government overspending in the recent decision to restrict 10 percent, or $14 million, of state discretionary spending, however, Senator Sam Slom points out that “this is clearly a reactionary step to the March tax collection reports and steps should have been taken much sooner. The Senate Minority has long cautioned that Hawaii’s economy has not turned a corner yet.” Senator Slom notes “when you talk to small business owners in various industries across the state, it becomes apparent that many businesses have not yet recovered from the recession.”

“While the legislature entered this year’s legislative session, with a Governor boasting of a record high surplus of $844M and a very optimistic outlook of the state’s economy while skirting the subject of our state’s unfunded liabilities (employee retirement and medical benefits) of over $22 billion dollars, it is becoming more and more apparent that the growth spurt in our economy was short lived. Based on these recently released tax collection reports, it is even more important we tighten our belts and identify sensible cuts for the long term to ride this slow recovery out.” says Senator Slom, Hawaii’s Senate Minority Leader.

Senator Slom’s more conservative outlook of the state’s economy was validated by the Council on Revenues, which downgraded the state revenue growth projections from 4.1% at the beginning of the year, to +3.3% shortly prior to the legislative session, then 0% on March 11th, and most recently on May 29th to -0.4% . According to Senator Slom, the recent -0.4% projection of state revenue is still overly optimistic. Slom notes that “if the general excise tax collections for the first quarter of 2014 as well as the recently released U.S. GDP statistics are taken into account, further downgrades of state revenues should be expected.”

Rather than waiting on the next Council on Revenues tax revenue projections, which will be released sometime in September, Senator Slom urges the Abercrombie Administration to take immediate action to avoid the current $450M biannual budget deficit from growing even larger.

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