How Sustainable Is the State General Fund—FY 2014-21?

For decades, the Hawaii legislature has ignored to account for the full cost of retirement and healthcare benefits for state workers, as well as the overall growth in program expenditures. As a result, short-term budget decisions have often been prioritized at the expense of the state’s overall long-term financial position and the current budget deficits are not sustainable beyond the FY 2016-17 budget. The legislature should therefore carefully examine the assumptions in the state’s financial plan and scale down general fund spending immediately. Instead of taking a reactive approach by relying on overly optimistic assumptions and retroactive actions through executive spending restrictions, the legislature should be proactive and balance the FY 2016-17 biennium budget by taking a stand to cut at least $425M in spending. This would prevent the legislature from having to raise taxes and it would be put the state on a healthier fiscal trajectory.

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