Friday, July 12, 2024
Hawai'i Free Press

Current Articles | Archives

Friday, June 19, 2020
How to balance the budget in just a few clicks
By Keli'i Akina PhD @ 7:56 PM :: 2553 Views :: Hawaii State Government

GRIH: Akina discusses state budget on KITV4 Island News

How to balance the budget in just a few clicks

by Keli'i Akina, Ph.D., Grassroot Institute, Jun 19, 2020

This morning I balanced the state budget. It didn’t even take that long; just a few quick clicks and Hawaii went from a $1.4 billion deficit to a modest surplus, with some rainy day money set aside in case of emergency.

Of course, I had a few advantages that state legislators do not. For one, I wasn’t concerned with pleasing special interest groups or dealing with political fallout. Plus, I was using the Grassroot Institute of Hawaii’s new budget tool.

Launched this week, our new budget calculator allows anyone to try balancing the state budget. It includes the most recent data on state spending, tax revenues and surplus funds. It even warns users that reducing spending for certain programs could be “politically difficult.”

As much fun as it may be to play with the budget tool and try to balance Hawaii’s finances, it’s also a timely exercise. Next week, the state Legislature will reconvene, and one of its major goals will be to adjust the 2021 fiscal year budget to reflect the current state of affairs.

The COVID-19 crisis has been a disaster for Hawaii’s economy, and the state Council on Revenues responded accordingly, lowering its projected tax revenues for the coming year by more than $2 billion. Had the Legislature proceeded with the budget submitted by the governor at the beginning of the year, the budget shortfall would be $2.1 billion.

Fortunately, the Legislature has cut $740 million in proposed spending from the governor’s budget. Add another $327.2 million from the state surplus, and the deficit shrinks to $1.4 billion.

But here comes the first tough decision. Hawaii currently has $1.1 billion in the emergency budget reserve fund, otherwise known as the rainy day fund. If we apply the entire rainy day fund to this year’s budget, the deficit drops to $227.7 million. That means that only modest budget cuts would be necessary to balance this year’s budget.

However, that would only solve the problem for the coming fiscal year. Once the rainy day fund is gone, there’s nothing left to lean on in case of future emergencies. If we experience another significant crisis, like another health emergency or a natural disaster, we would not have the resources to deal with the budgetary repercussions.

So do we spend all of our rainy day funds or try to conserve some of that money for future emergencies and balance the budget by cutting spending?

If you were being prudent and planning for an uncertain future, you would reserve a portion of the emergency fund and cut spending. Unfortunately, some of our legislators are wearing rose-colored glasses when they look at our state’s finances. Despite dire predictions about Hawaii’s economic future from experts on all sides, these overly sanguine policymakers believe that Hawaii’s economy will rebound within a year or two.

They are not looking at the drop in revenues as a problem that will compound and require years of spending cuts. Instead, they are planning for the short term, which would virtually ensure budget shortfalls year after year as we try to recover from the pandemic.

Worse, some are suggesting borrowing our way into a balanced budget. That is another short-term solution that would increase the state’s debt and create yet another drain on our future finances.

Our leaders need to face the unhappy truth: Hawaii is in the midst of a budget crisis, and there is no easy solution. It may be tempting to treat the situation as a temporary one. However, using up the entire rainy day fund or going into more debt to balance the budget are short-sighted approaches that would only end up hurting us in the long run.

The best plan is the most responsible one: Reserve some of the rainy day fund for future emergencies, don’t incur additional debt and start making cuts.

We’ve even given them a tool to help them see how it’s done.


GRIH: New tool lets citizens balance Hawaii budget


TEXT "follow HawaiiFreePress" to 40404

Register to Vote


Aloha Pregnancy Care Center


Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii


Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii Military History

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Together


Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

July 4 in Hawaii

Land and Power in Hawaii

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

National Parents Org Hawaii

NFIB Hawaii News

NRA-ILA Hawaii


OHA Lies

Opt Out Today

Patients Rights Council Hawaii

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

Rental by Owner Awareness Assn

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

School Choice in Hawaii

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii