HAWAII SENATE MINORITY

ALTERNATIVE BIENNIUM BUDGET

Fiscal Years 2016-2017

28TH LEGISLATURE OF THE STATE OF HAWAII

April 6, 2015

State Senator Sam Slom (R-9 Oahu)

Minority Leader
State Capitol Room 214
Honolulu, HI 96813
Phone: (808) 586-8420
Email: senslom@capitol.hawaii.gov

Prepared By:
Paul Harleman, MBA
Budget Director
Senate Minority Research Office
Phone: (808) 586-6988
Email: p.harleman@capitol.hawaii.gov

hawaiialternativebudget.com

Table of Contents
Message from the Senate Minority Leader

Budget Plan

Overview of Budget Cuts

Financial Plan (General Fund)

For more information, please go to www.hawaiialternativebudget.com

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Message from the Senate Minority Leader

The Senate Minority Alternative Biennium Budget for the Fiscal Years 20162017 represents a balanced, responsible, and sustainable plan. The Alternative
Budget provides much needed tax relief to small businesses and low and
middle class families while putting government spending on a more
sustainable fiscal path.
Over the last decade, the state's general fund budget has grown from
$4.2 billion in 2005 to $6.4 billion in 2014. This far surpasses the rate of
inflation as well as state revenue. The path that we are on is unsustainable. We
must act now to reform our state government, or we will be forced to choose between
unacceptable options: To cut critical government programs such as education,
or saddle our future generations with our debt and higher taxes. Thats not the future we want for Hawaii. We
must act immediately and decisively in order to prevent a greater fiscal crisis in the future. We must pursue
fundamental reforms in the areas of collective bargaining and Medicaid.
Government spending in Hawaii is currently at higher levels than taxpayers can sustain. The legislature
has lost sight of the fact that the government exists to serve the taxpayers, not the other way around. Our
Alternative Budget changes the focus from inputs to outcomes, and is built from the ground up based on
three clearly articulated priorities:
1. Reduce the rising cost of living for Hawaii's working families
2. Improve Hawaii's deteriorating business environment
3. Make government less expensive and more effective
The Senate Minority Alternative Budget reduces spending by $1.59 billion and includes 445 fewer
positions in comparison to the Governor's Budget. Our Alternative Budget reflects the responsible
approach we must take to get the growing spending problem of our state under control. In addition, the
Alternative Budget will provide more than $425 million in relief to our overburdened small businesses
and working families.
The fiscal and economic challenges facing our state require strong leadership, tough choices and
political backbone. The Senate Minority Alternative Budget reflects this and provides an opportunity to
position Hawaii for long-term fiscal and economic success.

State Senator Sam Slom

Senate Minority Leader
April 6, 2015

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Budget Plan
The state budget reflects more than numbers, it is reflects shared values and policy priorities. The Senate
Minority Alternative Budget is based on a "priority and reality based" budgeting philosophy. This differs
from conventional budgeting, which requires the development of budgets based on clearly defined policy
priorities. The priorities of the Senate Minority Alternative Budget are three bold and simple objectives
which are designed to revitalize Hawaii's economy, and improve the lives of working families and small
business owners:
1. Reduce the rising cost of living for Hawaiis working families
2. Improve Hawaii's deteriorating business climate
3. Make government less expensive and more effective
In the legislature, revenue losses are often cited as arguments against tax reform legislation. The proposed
Senate Minority Alternative Budget demonstrates the fallacy of that presumption. The state should move
in a different direction, with sustainable balanced budgets and lower taxes.
Table 1. Senate Minority Tax Relief Package
Bill Number

Tax

2017

SB947

Increase Personal Exemption

SB957

Exempt Food from GET

SB958
SB959

2018

2019

2020

2021

-$115M

-$117M

-$120M

-$122M

-$185M

-$196M

-$214M

-$224M

-$232M

Repeal Corporate Income Tax

-$87M

-$98M

-$98M

-$101M

-$126M

Repeal Inheritance and Estate Tax

-$16M

-$16M

-$16M

-$16M

-$17M

-$287M

-$425M

-$445M

-$460M

-$497M

Estimated Revenue Impact:

The Senate Minority Alternative Budget accomplishes the following:

Unlike the other budget drafts that have been introduced so far, the Senate Minority Alternative
Budget balances the budget in the long run without having to rely on any current or future tax
increases.
Reduces the Governor's Budget by a total of $1.59 billion and 455 positions.
Provides a total of $287 million in tax relief in FY 2017 and $425 million in FY 2018 and
beyond.

Table 2. Budget Growth (All Means of Financing) FY 2015-2017

$14,000M
$13,500M
$13,000M
$12,500M
$12,000M
$11,500M
Governor's Budget
House Budget
SMO Budget

2015
$12,315M
$12,315M
$12,315M

2016
$13,146M
$12,838M
$12,567M

hawaiialternativebudget.com | 28th Legislature of the State of Hawaii

2017
$13,659M
$13,302M
$12,961M

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The Senate Minority Alternative Budget cuts a total of $1.59 billion from the Governor's Budget for FY
2016-2017. Despite these cuts, the proposed budget increases the current FY 2015 base budget by $252
million in FY 2016 and $646 million FY 2017. Most of these increases are for non-discretionary items
such as employee retirement benefit payments.
Table 3. Senate Minority Alternative Budget FY 2016-2017 (Departments - All Means of Financing)
Governor's House Budget Alternative Discretionary Hiring
Budget
Cuts
Budget Cuts Spending
Freeze
Restriction
Agriculture

Alternative
Budget

Total Cuts

$98M

-$8M

-$10M

-$3M

-$6M

$71M

-$26M

Accounting & General Services

$406M

-$1M

-$9M

-$12M

-$6M

$376M

-$30M

Attorney General
Business & Economic
Development

$163M

-$1M

-$9M

-$6M

$M

$147M

-$16M

$800M

-$266M

-$5M

-$2M

-$2M

$526M

-$274M

$4,871M

$M

-$6M

-$2M

-$2M

$4,861M

-$10M

Commerce & Consumer Affairs

$158M

-$4M

-$6M

$M

$M

$148M

-$9M

Defense

$230M

-$1M

-$2M

-$3M

-$2M

$222M

-$8M

Education

$4,039M

-$5M

-$261M

-$56M

-$26M

$3,692M

-$347M

Governor

$8M

$M

-$1M

-$1M

-$1M

$7M

-$2M

$115M

-$13M

-$2M

-$2M

$M

$99M

-$17M

$6,273M

-$171M

-$46M

-$22M

-$14M

$6,018M

-$255M

$43M

$M

-$2M

-$1M

-$1M

$40M

-$3M

$3,359M

-$49M

-$117M

-$38M

$M

$3,154M

-$205M

Judiciary

$346M

-$8M

-$21M

$M

$M

$317M

-$29M

Labor & Industrial Relations

$932M

$1M

-$10M

-$3M

-$2M

$918M

-$15M

Land & natural Resources

$297M

-$53M

-$9M

-$6M

-$7M

$222M

-$74M

$3M

$M

$M

$M

$M

$3M

-$1M

$22M

-$5M

$M

$M

$M

$17M

-$5M

$537M

-$12M

-$36M

-$3M

-$26M

$460M

-$76M

$60M

$M

-$3M

-$5M

-$9M

$42M

-$17M

Transportation

$1,811M

$M

-$33M

$M

$M

$1,778M

-$33M

University of Hawaii

$2,235M

-$71M

-$25M

-$20M

-$21M

$2,096M

-$139M

$26,805M

-$665M

-$612M

-$188M -$122M

$25,213M

-$1,592M

Budget & Finance

Hawaiian Homelands
Human Services
Human Resources
Health

Lt. Governor
Office of Hawaiian Affairs
Public Safety
Taxation

Total

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Budget Cuts
The Senate Minority Alternative Budget cuts a cumulative total of $1.59 billion ($989 million in general
funds) from the Governor's Budget for FY 2016-2017. The majority of these cuts are derived by adopting
the positions of the House Budget. HB500 HD1 includes $665 million in cuts total cuts to the Governor's
Budget.
In addition to the House Budget cuts, the Senate Minority Alternative Budget does not include any
funding for collective bargaining contract increases. The Governor's Budget includes a total of $575
million in collective bargaining increases for FY 2016-2017. By law, the Governor is required to
negotiate with public sector unions for salaries and employee benefits. The legislature, on the other hand,
has the discretion to decide whether to fund the increases associated with collective bargaining. In light of
the increasing costs for state employee pension and retirement benefits, the Senate Minority believes that
the current increases for collective bargaining are unwarranted.
The Senate Minority Alternative Budget also includes $310 million in budget restrictions. As a result of
lower than anticipated revenue collections, the previous Administration imposed a 10 percent executive
spending restriction on discretionary general fund appropriations. These restrictions amount to a $94
million on an annual basis. The Senate Minority calls on the current Administration to extend the
restrictions that are currently in place through FY2016-2017. In addition, the Senate Minority also calls
on the current Administration to impose a hiring freeze on general fund positions. Both budget
restrictions would save taxpayers an additional $310 million through FY 2016-2017.
A total of $8 million in cuts is derived by reducing the general fund appropriations for low-priority
programs. In addition to the these cuts, the Senate Minority Alternative Budget also includes $38 million
in savings that are derived from consolidating administrative programs within the Department of Health
and Human Services.
Table 4. Senate Minority Alternative Budget FY 2016-2017 Proposed Budget Cuts
$1,800M
$1,600M
$1,400M
$1,200M
$1,000M
$800M
$600M
$400M
$200M
$M

Amount

Budget Restrictions (Hiring Freeze &

General Fund Restrictions)

$315M

HB500,HD 1 Budget Cuts

$665M

No Funding For Collective Bargaining

Increases

$566M

Program Consolidations

$36M

Additional General Fund Budget Cuts

$8M

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Table 5. Senate Minority Alternative Budget FY 2016-2017 (By Means of Financing)

Means of
Financing

Governor's
Budget FY
2016-2017

House
Budget
Cuts

Alternative
Budget
Cuts

Additional
Budget
Restrictions

Senate Minority
Alternative
Budget FY 20162017

General Funds

$13,845M

-$236M

-$443M

-$315M

$12,851M

Special Funds

$6,277M

-$117M

-$116M

$M

$6,044M

Federal Funds

$4,809M

-$54M

-$44M

$M

$4,711M

Federal Grants

$381M

$8M

$2M

$M

$391M

Private Funds

$1M

$M

$M

$M

$1M

County Funds

$M

$M

$M

$M

$M

Trust Funds

$371M

-$242M

-$2M

$M

$127M

Transfers
Revolving
Funds

$175M

$M

-$3M

$M

$172M

$920M

-$25M

-$5M

$M

$891M

$26M

$M

-$2M

$M

$25M

$26,805M

-$665M

-$612M

-$315M

$25,213M

Other Funds
Totals:

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Financial Plan (General Fund)

Pursuant to the Executive Budget Act, the Governor is required to submit a six-year program and
financial plan to the legislature, which is also known as the state's multi-year financial plan. Not all
expenditures are made through the budget. There are specific appropriation requests that are made
through separate legislation, such as departmental requests for emergency funding and collective
bargaining agreements. In addition, the effects of legislation with a fiscal impact are also not disclosed in
the actual budget. The multi-year financial plan is of vital importance, as it reveals a comprehensive and
long-term portrait of the state's fiscal affairs.
Table 6. Revenues over (under) Expenditures Comparison FY 2015-2021
$800M

$600M

$400M

$200M

$M

-$200M

-$400M
Alternative Budget
Governor
House Budget (HB500,HD1)

2015
-$71M
-$71M
-$71M

2016
$271M
-$178M
-$80M

2017
$35M
-$218M
-$79M

2018
$96M
-$49M
$72M

2019
$247M
$75M
$308M

2020
$411M
$319M
$545M

2021
$566M
$570M
$750M

The Governor's and House Budget drafts both rely on projected deficit spending until 2017 and 2018. The
Senate Minority Alternative Budget is based on the guiding principle that budgets should always be
balanced, no matter what. Despite the $287 and $425 million in anticipated revenue losses resulting from
the Senate Minority's Tax Relief package in FY 2017 and 2018, the Senate Minority Alternative Budget is
the only budget that is balanced in both the short and long-term.

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Table 7. Multi-Year Financial Plan (General Fund)

Nontax revenues
Revenue impact of legislation
Senate Minority Tax Relief
Package

2015

2016

2017

2018

2019

2020

2021

$730M

$636M

$643M

$653M

$661M

$664M

$667M

$M

-$4M

-$4M

-$4M

-$4M

-$4M

-$4M

-$287M

-$425M

-$443M

-$456M

-$490M

Tax revenues

$5,666M

$5,977M

$6,306M

$6,653M

$6,985M

$7,335M

$7,701M

Revenue

$6,395M

$6,609M

$6,657M

$6,877M

$7,199M

$7,539M

$7,875M

-$6,070M

$6,317M

$6,552M

-$6,716M

-$6,884M

$7,056M

$7,232M

-$155M

-$146M

-$147M

-$150M

-$154M

-$158M

-$162M

-$36M

-$36M

-$36M

-$36M

-$36M

-$36M

-$36M

-$3M

-$2M

-$3M

-$3M

-$3M

-$3M

-$3M

-$283M

-$72M

-$121M

-$111M

-$111M

-$111M

-$111M

$80M

$80M

$80M

$80M

$80M

$80M

$80M

$94M

$94M

$94M

$94M

$94M

$94M

$61M
$6,622M

$61M

$61M

-$6,466M

$61M
$6,338M

-$6,780M

-$6,952M

$61M
$7,128M

$61M
$7,308M

-$71M

$271M

$35M

$96M

$247M

$411M

$566M

Executive Branch operating

budget
Judicial Branch operating budget
Legislative Branch operating
budget
OHA operating budget
Other expenditure adjustments
(Collective bargaining, etc.)
Lapses
Keep executive restrictions in
place
Hiring Freeze
Expenditures
Revenues over (under)
Expenditures

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