Rooted in Reason: Nurturing the Seeds of Liberty


Two Things are Certain: Debt & Taxes by maliab
January 12, 2011, 5:23 pm
Filed under: Economy, Hawaii Sunshine | Tags: , , , ,

By Malia Hill

Honolulu Civil Beat has a new article up about the spending increases requested by Hawaii’s Department of Budget & Finance.  As you can see on the Hawaii Sunshine site, Budget & Finance is one of the spendiest of all Hawaii’s state departments, and Interim Director Kalbert Young says that they need $1.78 billion in 2012 and $1.92 billion for 2013.  (Their budget for 2011 is $1.63 billion.)  Of course, you won’t be surprised to hear that a big part of the need for that spending increase is for pension and health payments for Hawaii state employees.  The article has a good rundown of the pension budget concerns:

The cost to cover retirement benefits is estimated to go up to $681 million in 2012 and $674 million million in 2013 — up from $611 million in the current fiscal year. This includes payments for Department of Education and University of Hawaii employees.

Those increases don’t address unfunded liability issues: the funding gap between what the ERS currently has in its pension fund and what’s needed to cover future payments is at $7.14 billion, up $900 million from the previous year.

Because ERS contributions are based on payroll percentages, Young said the increases are related to higher salaries once furloughs end this June. Employer contributions are based on the following percentages: 19.7 percent of compensation for police and firefighters and 15 percent for all other state and county employees.

He said the department plans to submit proposed measures to lawmakers to help address the underfunded retirement fund.

“There will be several measures, or concepts, that will likely impact or address the unfunded liability issue, but overall, a resolution is a much bigger discussion that will involve a much more comprehensive submittal,” he told lawmakers. “You will be getting some measures that will take us a step in that direction.”

 

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