Strengthening Our Economy

Hawai`i is facing a challenging period, with many unprecedented events converging to create an economic, financial, and fiscal environment that threatens the very foundation of our national economy. Problems that arose in the national housing sector and sub-prime mortgage market starting in late 2007 have affected the credit markets making it difficult for businesses and individuals to obtain funding for on-going and new projects and operations.

The construction industry saw a slowdown and the housing market also weakened, although not to the levels experienced on the mainland.  For our State government, the financial crisis and economic downturn have adversely impacted tax revenues, resulting in $2 billion less in State revenues than we projected we would have 18 months ago.

In the current economic environment, the State recognizes the need to provide essential services as well as maintain a fiscally responsible and balanced budget.  Reflecting the fiscal prudence that Hawai`i households and businesses are exercising during these challenging times, the Lingle-Aiona Administration proposed a balanced budget.  At the same time, this balanced budget also minimizes cuts in areas of strategic importance to Hawai`i, including public education and clean energy.

However, the revenue gap cannot be closed by budget reductions alone as further cuts to essential services may prove unproductive and destabilizing at a time when public spending and employment are necessary in order to stabilize the economy.  As a result, a number of legislative measures were proposed to both stabilize the budget and enhance revenues. 

Three measures were introduced to transfer a total of $94 million for fiscal years 2009 and 2010 from the Emergency and Budget Reserve Fund (also know as the Rainy Day Fund), Deposit Beverage Container Special Fund and Wireless Enhanced 911 Fund.  An additional measure also ensures that the Rainy Day Fund will be replenished when the economy improves by transferring a percentage of the General Fund carry-over balance to the Rainy Day Fund. 

Additionally, to support the Administration’s goal of making Hawai`i’s tax system efficient and equitable, four proposals were submitted to tighten up tax laws, improve tax collection and administration, and reduce excessive tax credits.  The dividend from these efforts is expected to add $122 million to State tax collections for the biennium, fiscal years 2010 and 2011.

Key Legislation »

• HB1063, SB881: Lowers the cost of health benefits for public employers and public employees.
• HB1064, SB882: Requests an emergency appropriation to the General Fund of $60 million from the Emergency and Budget Reserve Fund for fiscal year 2009.
• HB1065, SB883: Requests a transfer to the General Fund of $15 million from the Emergency and Budget Reserve Fund for fiscal year 2010.
• HB1066, SB884: Requests a transfer to the General Fund of $10 million from the Deposit Beverage Container Special Fund and $9 million from the Wireless Enhanced 911 Special Fund for fiscal year 2010.
• HB1067, SB885: Ensures funds are available for future fiscal emergencies.
• HB1154, SB972: Ensures Hawai‘i businesses and residents are paying their fair share of taxes. 
• HB1155, SB973: Deters tax fraud and promotes uniformity in the tax system.
• HB1156, SB974: Amends the High Technology Investment credit.
• HB1106, SB924: Protects the rights of public employees.
• HB1109, SB927: Requests State leaders to lead-by-example during fiscally challenging times.

Important Information »

Governor Lingle delivered remarks on Hawai`i's economy at the Chinese Chamber of Commerce of Hawai`i. Read more.

Related Information »

• Five-Point Economic Action Plan
• $1.8 Billion Capital Improvement Project Plan