“We think it would be more prudent to recapitalize it over a longer period of time … to make a smaller payment this year and spread it out over three years, rather than spread it over two years” said Baker,
By TREENA SHAPIRO
Associated Press
HONOLULU — Replenishing the state’s reserve funds would send a positive signal to credit rating agencies.
Hawaii officials just have to figure out how fast they want to do it.
A successful bond sale in December puts the state in a position to recapitalize its Emergency Budget and Reserve Fund and Hawaii Hurricane Relief Fund faster than anticipated, after both were tapped to balance the budget. However, since the Council on Revenues recently adjusted its economic forecast downward, administrators and lawmakers are trying to determine how best to deal with the reserves.
“It is a conundrum because we know these reserves count as our carry-over balance,” said state Sen. Roz Baker, chairwoman of the Commerce and Consumer Protection Committee.
State Budget Director Kalbert Young agreed. “The state needs to demonstrate some positive reserves, so how we get there — and how we afford to fund other wants — is a challenge,” he said.
Because the depleted reserves were cited as part of the reason Hawaii’s credit rating was downgraded last year, Young did advise lawmakers to start rebuilding the funds this fiscal year.
Prior to the lasted Council on Revenues forecast, the administration proposed using money from the December bond sale to recapitalize the reserves over two years, using $75 million in the 2012 fiscal year and $99.7 million in 2013.
The administration recognizes there are increasing demands from other programs for the funds and is “willing to cooperate in terms of timing the recapitalization and amounts in the current fiscal biennium,” Young told lawmakers.
The committee endorsed a longer timeline for building the reserves back up, focusing on the hurricane fund that’s under the panel’s purview.
“We think it would be more prudent to recapitalize it over a longer period of time … to make a smaller payment this year and spread it out over three years, rather than spread it over two years” said Baker, D-Maui.
