GOVERNOR LINGLE UNVEILS FY07 BUDGET PLAN

For Immediate Release:  Monday, December 19, 2005

HONOLULU – Governor Linda Lingle submitted today to the State Legislature a Fiscal Year 2007 (FY07) Supplemental Budget and Financial Plan that includes $260 million in new education funding for public schools and the University of Hawai`i, $300 million in tax relief, and an additional $926.6 million for new capital improvements, half of which is targeted to upgrade harbors, airports and highways.

“We are proud to offer the people of Hawai`i a budget and financial plan that invests in our state’s future, addresses the deferred maintenance of public facilities, and eases the high cost of living for our residents,” said Governor Lingle.

“The supplemental budget also allows us to double the size of our Rainy Day Fund to $110 million.  It is gratifying to know that we now have the financial resources to make these important investments in our state,” she added.

The budget adds $528.5 million in operating expenses, and was developed as Hawai`i’s economy is registering one of its best years ever.   Throughout the first three quarters of calendar year 2005, the State’s economic performance continued to exceed expectations and projections.  The current solid rates of growth in employment, personal income and tax collections are indicative of the continuing broad-based expansion of the local economy. 

“State departments and programs have had to operate under stringent conditions for many years when the economy was performing poorly and general fund revenues were inadequate to meet community needs,” said Governor Lingle.  “With easing financial constraints, we can now address these public funding issues in a fiscally positive environment.”

“The proposed expenditures renew and increase our commitment to public education, invest in workforce development, bolster our support for health and human services to those most in need, protect and preserve our natural and cultural resources, increase the carrying capacity of our transportation systems, rebuild our infrastructure including public housing, and allocate funds for disaster preparedness.”

Specifically, the budget requests include an additional:

• $138.8 million for public education, including $63.2 million for school repairs and maintenance;
  
• $45.6 million in operating funds and $251.6 million for capital improvement projects for the University of 
  Hawai`i, of which $175 million are private funds for development of UH-West O`ahu.  A total of $11.7 million in the university’s budget is targeted to expand workforce development programs for teachers, nurses and construction trades;
  
• $87.5 million in operating funds for the Department of Human Services, primarily to maintain and expand medical and dental services for those in need;
  
• $85.7 million in operating funds and $17.4 million for capital improvements for the Department of Health, primarily to provide services for developmentally disabled individuals and to meet increased costs of medical services;
  
• $82.8 million in operating funds and $42 million for capital improvements to preserve and protect our natural and cultural assets, including $10.5 million in improvements for State parks and $10 million in improvements for small boat harbors, docks and facilities;
  
• $20.3 million in operating funds and $462.5 million in capital improvements for State harbors, airports and highways, including $195.2 million for major renovations at Honolulu International Airport; and
  
• $35 million in operating funds and $6.2 million for capital improvements to continue investment in public and affordable housing projects.

“I am proud of the fact that this proposed budget is able to achieve the spending priorities outlined above, provide much-need tax relief, set aside funds for a rainy day, and still have a respectable balance at the end of each year for the next six years,” said Governor Lingle.

The proposed $528.5 million increase in operating expenditures includes $238.9 million in new general funds, $121.3 million in new federal funds, and the balance in revolving funds and interdepartmental transfers.  Of the $926.6 million proposed for capital improvements, $265 million is new general obligation bonds, $158.1 million is new federal funds, and the balance is comprised of revenue, special and other bond funds.

The State’s disciplined approach to managing its budget has been favorably recognized by all three major credit rating agencies.  In May 2005, Moody’s Investor Service upgraded the State of Hawai`i’s rating from Aa3 to Aa2; Standard & Poor’s Rating Service upgraded the State’s outlook from stable to positive at the AA- level; and Fitch Ratings also maintained an AA- rating for the State.

Under Hawai`i’s biennial budget system, each budget period covers two fiscal years.  The current budget covers the fiscal biennium 2005-2007, which began on July 1, 2005 and ends on June 30, 2007.  The State Constitution allows the Governor to submit a supplemental budget for the second year of the fiscal biennium, which begins on July 1, 2006 and ends on June 30, 2007.

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For more information, contact:
Georgina Kawamura  
Director, Budget & Finance  
Phone:  586-1518  

Stanley Shiraki 
Deputy Director, Budget and Finance 
Phone 586-1516

Linda L. Smith
Senior Policy Advisor
Phone: 586-5330

Lenny Klompus
Senior Advisor – Communications
Phone: 586-7708

Russell Pang
Chief of Media Relations
Phone: 586-0043