- Associated Press - Monday, December 22, 2014

HONOLULU (AP) - Gov. David Ige has released a first draft of Hawaii’s $25.7 billion budget for the next two fiscal years that calls for no new spending beyond what’s legally required in a tight budget year.

Ige released the budget Monday, the deadline to submit the document to the Legislature. He said the document is a starting point and mainly includes funding for programs that the state is legally required to provide.

The budget includes $12.6 billion in spending in fiscal year 2016, which is a 4 percent increase over current spending levels, and $13.1 billion in spending in fiscal year 2017, which is an additional 4 percent increase. The state’s revenue is projected to grow by 5.5 percent each year, but there’s some concern that the amount of money the government takes in will not completely cover the planned spending.

“The fiscal reality is that there isn’t a whole lot of money,” Ige said in a news conference Monday. “Any new programs are going to have come from reprioritizing and working the budget, finding efficiencies.”

The first draft is a baseline budget that was mostly compiled by former Gov. Neil Abercrombie’s administration, and it includes obligations like collective bargaining agreements that were negotiated before Ige took office Dec. 1, Ige said.

Health care and pension benefits for the state’s current and former employees were among the highest proposed costs. The state plans to spend $87.4 million on health premiums for the Department of Education, University of Hawaii and other state programs in 2016, and that amount is expected to rise to $216.3 million in 2017. The substantial increase is due in part to the negotiated changes to how employers and employees split the costs. To pay for retirement benefits, the state plans to spend $65.5 million in 2016 and $99.8 million in 2017.

Officials from the state’s health exchange and its struggling public hospital system have been asking the state for more money to remain operational, but they will not see the increases they were looking for in this budget draft. Hawaii Health Systems Corp., the public hospital system, had been asking the Legislature for money to stave off staff cuts and service reductions in hospitals throughout the Hawaiian islands.

“It is clearly less than what they are asking for,” Ige said. “And again, it really is about getting new leadership on board … so fresh eyes will be looking at the challenge of providing quality health care in rural communities.”

Ige believes more revenue could be found by modernizing the state’s tax collection system to go after outstanding tax payments, he said. Year-end surpluses including $844 million in fiscal year 2014 and a projected $664.8 million in 2015 are helping the state live within its means, Ige said.

“We have a razor-thin margin that we are working with,” Ige said.

Ige is still filling cabinet positions and hopes to have department directors seated by the end of the year, he said.

The budget includes capital improvement projects intended to address a backlog of health and safety issues statewide, paid from general obligation bonds. Among the proposals are $100 million in bonds each year to maintain and improve Hawaii’s public school facilities. The University of Hawaii is slated for $36 million in 2016 and $27.4 million in 2017 to fix health, safety and code deficiencies statewide. The state’s public hospital system is lined up for $12 million each year for capital improvement projects.

The fiscal year runs from July 1 through June 30.

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