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Monday, February 8, 2010
Senate bill would force Governor to spend money State does not have
By News Release @ 6:45 PM :: 6842 Views :: Energy, Environment


HONOLULU – Members of the Governor’s Administration today testified before the Senate Ways and Means Committee on the importance of preserving the Executive Branch’s authority to manage the State’s finances.

A bill (SB2007) being considered by the Legislature would limit the authority of the Governor and director of finance to restrict the release of funds, reduce allotments or suspend or abolish existing programs even if the State does not have sufficient revenues to pay for them.

Furthermore, this measure would essentially give the Legislature the sole power to determine the establishment or abolishment of new or existing programs that use public funds.

“SB2007 infringes on the separation of powers between the Legislative and Executive Branches, and also infringes on the Governor’s authority to administer the budget. It is the responsibility of the Governor under the State Constitution to ensure that the budget is balanced and expenditures are made prudently. In order to do so, the Governor requires the flexibility and authority to render financial decisions,” said Barry Fukunaga, the Governor’s chief of staff in written testimony. 

Budget Director Georgina Kawamura, who submitted testimony stated that limiting the authority of the Governor and Executive Branch could adversely impact the State’s bond rating. The Governor’s authority to reduce expenditures has been cited by all three bond rating agencies as one of the State’s credit strengths and a determining factor in maintaining Hawai‘i’s favorable bond ratings. 

“Unlike many states, Hawai‘i’s Governor has strong executive powers to cut spending and balance the budget and recent actions to reduce expenses underscore ongoing willingness to take those steps,” Moody’s Investors Services cited in its February 4, 2010 credit rating report for Hawai‘i.  Standard and Poor’s and Fitch, the other nationally recognized rating agencies,  also emphasized that the ability of the Governor of Hawai‘i to curtail expenditures without legislative approval is key to maintaining Hawai‘i’s favorable ratings when the State borrows money.

Fukunaga pointed out in his testimony that it would be impractical and infeasible for the Legislature to call itself back into session for the sole purpose of authorizing restrictions when the State faces dramatic budget shortfalls, as has been the case over the past year-and-a-half.

He cited recent examples when the Executive Branch implemented significant budget restrictions in fiscal year 2008-2009 to balance the budget following multiple lower projections by the Council on Revenues over a short period of time.

Kawamura expressed similar concerns.

“During periods of fiscal uncertainty, it is critical that the Governor and Executive Branch have the authority and flexibility to control spending, reduce expenses, and economize available resources,” said Kawamura in her written testimony.

Kawamura said the current law that provides the Executive Branch with the authority to restrict funds is critical to managing the State’s finances and keeping spending in line with revenue collections.

“We strongly oppose this bill because the proposed amendments (to the current law) would seriously undermine and impair the ability of the Governor and the Executive Branch to manage State programs and resources for efficiency, productivity and economy,” said Kawamura.

“When revenues are deemed insufficient or uncertain, fiscal prudence must be exercised to avoid deficits in the budget,” said Kawamura.  “Where program requirements need further examination and justification, management review is the prerequisite for expending public funds.  Actions to control expenditures are exercised as needed throughout the year by the Executive Branch in its capacity as administrator of State programs and finances.”

Both Chief of Staff Fukunaga and Deputy Budget Director Barbara Annis, who testified on behalf of Kawamura, urged the Ways and Means Committee to hold the bill in committee. 



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