As we begin the New Year, the State of Hawai'i is in a much-improved financial and economic position. This achievement is no accident. We all have worked diligently to stabilize our fiscal situation and grow the local economy over the last three years.
As a result, our state government ended fiscal year 2013 with a positive fund balance of $844 million. The balance marks a $1.1 billion turnaround since I took office.
Our labor market is also healthy, with the fifth lowest unemployment rate in the nation. In October, the statewide unemployment rate was 4.4 percent, which is improved from a high of 6.6 percent in 2011.
Government That Works
Governor Neil Abercrombie
On Maui, it was 4.9 percent in October (not seasonally adjusted), down from 7.9 percent in 2011. The state Department of Labor and Industrial Relations (DLIR), which provides long-term industry and occupational projections, is forecasting further positive industry growth for all of the counties from 2010 to 2020. Kaua'i and Maui Counties, with forecasted expansion rates of 15.4 and 15.1 percent respectively over the 10-year period, will increase the fastest, followed Hawai'i County with 14.8 percent growth and Honolulu with 10.5 percent growth.
In additional good news, DLIR recently announced that unemployment insurance tax rates for 2014 will be reduced 35 percent on average, resulting in employers paying $130 million less in taxes--or $300 less per employee on average for 2014. This tax rate reduction is possible due to the growing balance in the Unemployment Compensation Trust Fund, another positive sign that our local economy is improving. Many small businesses throughout the state can now consider investing the savings in their businesses and personnel.
As we head into 2014 and another legislative session, I assure you that this administration will continue our responsible management of state fiscal affairs in order to build upon our state's $1.1 billion turnaround.
We have a plan to further build the financial strength of the state by recapitalizing reserves to higher-than-pre-recession levels. A targeted objective has been set to build state reserves to 10 percent of general fund revenues, which will allow Hawai'i to weather future economic downturns and mitigate against cyclical public service cutbacks.
This comes as our state is already embarking on forward funding its Other Post-Employment Benefits (OPEB) unfunded liability, which has gone unaddressed for decades. A landmark payment of $100 million will be made in fiscal year 2014, followed by a payment of $117.4 million in fiscal year 2015.
Over the past three years, we have taken aggressive measures in stabilizing the state's fiscal situation.
I have no doubt that Maui Weekly readers recall that our state faced a $220 million shortfall in 2011, leaving it with crippled programs, furloughs and legislatively imposed revenue enhancement measures. Hawai'i's improved fiscal position now allows us to tackle important issues, such as early childhood education and development, support for our seniors, environmental protection and restoration of critical government services like agricultural inspections.
Only with a strong economy and sound financial management can we adequately address these important issues. But fiscal sustainability is essential, and to this we remain committed. We will not turn back; we will not repeat the mistakes of the past; we will meet our fiscal responsibilities.
View a report on "Hawai'i's Fiscal and Financial Condition" at governor.hawaii.gov (click on "$1.1 Billion Turnaround" under "Useful Links").