EXCLUSIVE: State 10% budget restrictions begin Tuesday

EXCLUSIVE: State 10% budget restrictions begin Tuesday

HONOLULU (HawaiiNewsNow) - Gov. Neil Abercrombie is restricting spending for 21 state departments beginning July 1 by nearly $14 million for the first quarter of the fiscal year, equal to about 10 percent of their discretionary funds.

"As long as revenues look like we could be in a situation where revenues are flat, we want to be very cautious about how we actually expend monies," said state Budget Director Kalbert Young.

Young said because state revenues are predicted to be flat to nearly a half percent lower for the fiscal year that ends Monday June 30, he doubled the spending restrictions from last year's five percent cut back.

"While the ten percent is, admittedly larger, it's still only preliminary and it's really until certain financial and fiscal matrix are more thoroughly evaluated for the state," Young told Hawaii News Now.

The restrictions mean departments will not be able to spend money buying new vehicles and other equipment, hiring new personnel or expanding new programs or starting new ones, at least for the next few months.

"Getting on to any expenditures of new programs, we want to be sure that the revenues will actually materialize before we start those programs and we want to be sure that we're on the right revenue path before we start implementing a new program," Young said.

Young said the smallest agencies, such as his Budget and Finance Department and the Agriculture Department, will be affected by the restrictions the most because they have the least budgetary wiggle room.

But Young said the Department of Education that runs public schools and other larger departments will be better equipped to adjust to the temporary cutback. He said the DOE has already asked for reconsideration from the cut, since it comes at the beginning of the school year when public schools have their largest start-up costs.

Young said he hopes to restore the money in several months, since the state's Council on Revenues predicts a 5.5 percent hike in state tax revenues for the fiscal year that begins Tuesday, July 1."Any program expansions, any new hirings, it's not that they will not occur, we believe that they will. The timing of which may just be a little bit more delayed by a few months, until we see what actually happens on the revenues," Young said. "This is cautious fiscal management."The temporary cuts affect all state departments that receive general funds.

For instance, the Department of Transportation, which runs entirely on federal and special funds that come from gas taxes, airport landing and rental fees and other revenue, is not affected by the cut back because it does not receive general fund monies. The Department of Commerce and Consumer affairs, which runs on special and trust funds that come from state licensing fees and other revenue, also is not affected by the restrictions.

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