48 Pages Posted: 2 Apr 2010 Last revised: 13 Apr 2010
Date Written: April 3, 2010
The economic downturn that began in 2008 is continuing to create budgetary problems for the state of Hawaii. The biennial budget passed in 2009 reflected an anticipated shortfall of $2.1 billion. The budget was balanced half by appropriations cuts, and the other half by revenue increases. At the end of 2009, Hawaii was ranked as one of the 10 states with the worst budget deficit problems (Paulson 2009). Even though the state took drastic actions to furlough teachers and other state employees for nearly three days a month, cut spending and raised taxes, projections at the end of the year showed the state had a 13 percent shortfall halfway into the fiscal year (FY 2010, see Paulson 2009).
As the legislative session began at the beginning of 2010, revenue projections came in even lower than projected, leaving a significant deficit for the legislature to reconcile. Because of the state constitutional requirement that the budget be balanced annually, the state has had to revise the biennial budget passed last year (FB 2009-11). Off-year supplemental budget packages including adjustments to revenues and appropriations are made as a matter of course, but this year is particularly significant given that the expected shortfall for the current fiscal biennium is $1.2 billion (HCF 2010).
Tax increases, contract renegotiations, employee furloughs, and across the board cuts were implemented last year and are likely to continue. Still, they will not be enough, and the governor and the legislature are locked in a struggle over priorities. For many reasons that are unique to the politics of the State of Hawaii, certain departments and programs will likely have to shoulder the brunt of these cuts while other have will remain relatively unscathed. Taxes will likely increase, with tourists bearing a shoulder of the burden. The rest of the tax revenue increase is likely to come either as tax increases on businesses or delayed refunds to individuals.
Keywords: Hawaii, Budget, State Budget, FY 2011
Suggested Citation: Suggested Citation
Belt, Todd L. and Northrop, Shannon, Learning to Do Less with Less: The Hawaii State Budget for Fiscal Year 2011 (Preliminary Report) (April 3, 2010). Western Political Science Association 2010 Annual Meeting Paper . Available at SSRN: https://ssrn.com/abstract=1580989