LOS ANGELES — Hawaii Finance Director Kalbert Young said a flat revenue forecast will not slow the state's efforts to bolster reserves and prepay OPEB costs.
The amounts proposed for other-post employment benefits and the rainy day fund approved during last year's biennium budget process already have been allocated, Young said.
The Hawaii Council on Revenues lowered its forecast for growth in state general fund tax revenues in fiscal 2014 from 3.3% to 0.0% on March 11.
"We anticipated the council needed to adjust tax revenues downward, but I didn't anticipate it would go to zero, because it does not fit in terms of what I'm seeing in the data," Young said. "I was anticipating the forecast would be north of 1.5%."
The council's next quarterly forecast is due May 29.
The budget allocates $50 million each to the state's reserve funds and the Hurricane Reserve Trust Fund in 2014.
Those amounts are in addition to the $55.5 million in general excise tax revenues transferred in fiscal 2013 to the Hurricane Relief Fund. The money was allocated under legislation passed earlier this year.
Each fund also will receive $50 million in 2015 bringing Hawaii's reserves to more than $372 million, or 5.6% of projected general fund revenues in fiscal year 2015. The eventual goal is to build reserves up to 10% of general fund revenues.
The state has $100 million earmarked to start prefunding its OPEB unfunded liability in fiscal 2014. It will follow with a $117.4 million OPEB payment in fiscal year 2015.
The council attributed the drop to declining visitor spending, a decline in resident spending and replenishing the hurricane relief fund, which reduced revenues by 1% in fiscal 2014 and is expected to do the same in fiscal 2015.
The council also lowered its state revenue growth forecast for fiscal 2015 to 5.5% from 7.4% for fiscal 2015 and to 5% from 7.7% for fiscal 2016. It remains optimistic about the economy, which it says is still growing. It cited a number of major construction projects for the optimism.
The governor's supplemental budget for fiscal 2014 also includes an additional $351.7 million in new general obligation bond-funded capital improvement projects.
The state will pay cash for $187.4 million in projects it had previously planned to bond for in order to reduce the growth of long-term debt, according to the budget proposal. It also proposes to use cash from the general fund to pay for an additional $100 million in repair and maintenance projects to the state's infrastructure.
The state plans to issue between $500 million and $700 million of general obligation bonds between August and October if the rates are good and investor interest is high, Young said.
For the past several years, that state has issued between $800 million and $1 billion near year-end, but is aiming to split that into two sales going forward. Its second sale for fiscal 2014 will come between March and May 2015.
Even with the decline in revenues, Young still anticipates a $600 million surplus for fiscal 2014. Last year's surplus was $844 million.
"The effect on the budget will be to scale back some initiatives and expansions planned in the budget, or move them out a year," he said.