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Thursday, July 19, 2012
Abercrombie: Massive Tax Increase Allows State to Deal With Rats, Frogs
By News Release @ 10:52 PM :: 5676 Views :: Energy, Environment

Administration Affirms Commitment to Fiscal Plan as Economy Improves

Governor Abercrombie leads a news conference on the state's economic outlook.

News Release from  July 19, 2012

Strategy Sound as State Ends FY with Positive Balance; Tax Revenues Increase

HONOLULU –With signs of a strengthening economy, Governor Neil Abercrombie today announced that the State of Hawai'i is on track in its goals toward economic recovery and sustainability. The Governor was joined by Budget & Finance (B&F) Director Kalbert Young and Department of Taxation (DOTAX) Director Fred Pablo in announcing that the State has concluded its 2012 fiscal year (FY) with a positive ending balance and a bump in tax revenue. The State’s ending balance for FY 2012 is $306 million, and general fund receipts were up by 14.9 percent.

“We are in the second quarter of our term and this is the second consecutive year this Administration has ended the fiscal year in the black,” stated Governor Abercrombie. “Getting to this point did not come easy but we stuck to our plan, which was to fix our spending in order to restore basic services. We are now in a position to do that. We set out to make a transformation and we’re doing it.”

“This positive balance is evidence that we are governing in a sound manner in the face of severe fiscal requirements in the upcoming biennium budget,” added B&F Director Young. “Many states across the country are confronting similar fiscal threats and we are not immune to those issues.”

National events and published reports attest to the financial landscape faced by many states. In a report released earlier this week by a national organization called the State Budget Crisis Task Force (, Hawai'i identified with the following threats faced by a number of states:

·       Medicaid spending growth

·       Federal deficit reduction

·       Underfunded pension funds

·       Unfunded liabilities for health care benefits

Examples of basic services that Governor Abercrombie wants to restore include the hiring of inspectors in the Health, Agriculture and Land and Natural Resources departments.

“Recent reports have highlighted that a shortage of inspectors has compromised the health and safety of the public and our land and seascapes,” said Governor Abercrombie. “We are an island state. Coqui frogs have proliferated across Hawai'i Island, and they haven’t just changed the noise level at night but they are changing the island’s ecosystem. In Waikiki, the lack of adequate vector control has resulted in a rat infestation. These are just two examples of what we must get a handle on.”

The Governor also reiterated his commitment to other Administrative priorities in need of funding. They include restoring the State’s watersheds, investing in early childhood education, and updating the State’s technology system.

Tax Revenue Increases

Earlier this week, the Department of Taxation reported that general fund deposits are up by 14.9 percent compared with the 2011 fiscal year. This equates to $127 million more than what the Council on Revenues had projected.

If the $187.4 million accrued refunds that were released in July 2010 are factored out, general fund deposits would increase by 10.2 percent.

“The Tax Department is also improving services for taxpayers in the form of quicker processing, deposits and refunds,”stated DOTAX Director Pablo. “This past fiscal year we ensured that taxpayers received their tax refunds in a timely manner. That doesn’t just add more money in your pocket but it stimulates consumer spending.”

B&F Director Young noted, “The strong revenue data is significant because it supports recent general economic statistics that the State’s economy is improving and this is having a positive effect on the State's financial and fiscal condition.”

National Investors Take Notice

For FY 2009-2010, the State of Hawai'i finished with negative ending balances, resulting from an economic recession and exacerbated by declining revenue projections for the next fiscal year. When Governor Abercrombie took office in December 2010, the State faced a $200 million revenue shortfall. At the end of the last fiscal year (FY 2011), the State reported a positive ending balance of approximately $126 million. Now, the State’s ending balance for FY 2012 is $306 million.

Last month, Moody’s Investors Service affirmed its Aa2 rating on $4.9 billion of Hawai'i’s general obligation bonds. It noted the work of the State’s financial team, stating: “The Aa2 rating incorporates Hawai'i’s improving financial operations following the recession-driven revenue fall-off over the last several years.”

Shifting the Economy, Building Jobs

Focused on addressing the need for job creation and affordable housing, Governor Abercrombie has approved more than $331 million in Capital Improvement Projects (CIP) across the State selected for their potential to immediately stimulate the economy and generate job opportunities for residents.

Furthermore, 10 State projects were recently listed by Pacific Business News as being among the top 25 residential construction projects in Hawaii. Ranging from long-term community development to renovation and revitalization of existing units, these 10 public-private ventures are expected to generate a total of 6,050 direct jobs and 8,766 indirect jobs, as well as create or restore 3,901 affordable homes or units. For more information about these projects please visit:

“We are making strides toward our New Day vision,” said Governor Abercrombie. “I’m proud of our team and appreciate the work of everyone who has supported us in our efforts. Now is the time to re-double our efforts to work together to resist any special or private interest group pulling us back into the sinkhole of fiscal irresponsibility.”




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