Surplus impossible unless governor's taxes and spending were cut, lawmakers say

HONOLULU (HawaiiNewsNow) - Gov. Abercrombie Monday announced the first increase in state government's net worth in years as two top state senators – including one challenging Abercrombie's re-election – said lawmakers also deserve credit for the state's improving financial situation because they rejected Abercrombie's tax hike proposals and cut his budget.

Abercrombie held a news conference in his State Capitol office to announce the state's net worth went up by $307 million – or nearly seven percent -- last year. That was the first increase since 2006.

"For the first time in seven years, we're powering into the black, into the positive side and we're going to keep going," Abercrombie said.

Abercrombie pointed to the state's $844 million budget surplus – which equates to having extra cash in the state's checking account -- as one of his major accomplishments. When he took office in 2010, the state had a $1.3 billion dollar deficit.

"On every level, I think we're moving.  On every level, there are positive signs.  On every level, there's every reason to have confidence in where we're going," Abercrombie added.

State Sen. David Ige -- who heads the Senate's ways and means committee -- is running against Abercrombie in this August's Democratic primary.

Ige pointed out that lawmakers rejected Abercrombie controversial proposals to raise the hotel room tax last year. In the years before that, lawmakers said no to Abercrombie's plans to create a tax on sugary sodas and pensions.

"I think the fact that we rejected his tax increases, that we cut spending, was a large portion of that.  But there are lots of things that go into managing the fiscal condition of the state," said Ige, who has chaired the Senate's powerful money committee for the past four years.

In the last three years, lawmakers said they have cut about $870 million from Abercrombie's proposed budgets, exceeding the size of the $844 million budget surplus.

State Senate President Donna Kim headed the Senate's ways and means committee in 2009 and 2010.

"In order to pay for his (Abercrombie's) spending, he had to raise the taxes.  And because we didn't raise the taxes, we had to cut his budget," Kim said.  "And because we cut his budget, we are now in the situation we're in," with a surplus, Kim said.

"We had to ask for those cuts and we made those cuts and if we had passed the governor's budget, we couldn't pay for it. We'd have to have raised taxes, and we weren't about to do that," Kim said.

Kim is running for Hawaii's first Congressional seat, representing urban Oahu.

Asked if state lawmakers deserve some credit for the financial improvements in the state's outlook, Abercrombie told reporters, "It seems to me that anybody claiming credit also needs to take responsibility when things were going the other way and nothing got done."

"I'm always pleased to share credit when people realize that they can't avoid their responsibilities anymore and take it up," Abercrombie added.

The state's Comprehensive Annual Financial Report, which Abercrombie released Monday, reported that general excise taxes, "which are the state's largest source of revenue and a good measure of economic growth, decreased 2.6 percent" between July 2013 and January of this year.

That's why Ige cautions against growth in new programs, even though the state has a budget surplus.

"I think part of it is just being responsible and not initiating new liabilities or new programs," Ige said.