State sits on record $1 billion surplus

HONOLULU — Hawaii has ended last fiscal year with a record-setting $1 billion general treasury cash surplus, which could impact contract negotiations as the state begins bargaining with public worker unions.

Hilo lawyer Ted Hong said public workers could be in for significant pay increases because of the large cash balance for the fiscal year ending June 30. The state recently opened a new round of contract negotiations with unions and spoke with representatives of the Hawaii State Teachers Association last week, The Honolulu Star-Advertiser reported.

All of the state public worker unions have contracts that expire June 30.

Hong was chief negotiator for the state during former Gov. Linda Lingle’s administration. He said the state’s extra funds mean big pay raises for workers are “a given,” unlike in previous administrations that have used financial struggles as an excuse not to fund them.

“The first, fundamental issue is always whether there’s enough money to fund the proposed pay raises,” Hong said. “Now that issue here is going to be off the table.”

While the billion-dollar surplus may alter the course of negotiations, state budget officials say some of the funds have already been earmarked.

State lawmakers this year appropriated $200 million for the state’s emergency budget reserve fund and $81 million to prepay future retirement health benefits for public workers.

The state was able to accumulate such a large cash surplus by restricting discretionary spending by state departments, even as state tax collections exceeded the official projections, said Wes Machida, director of the state Department of Budget and Finance.

“Actual revenue collections have been good, the Hawaii economy is good and we are making sure that we live within our means,” Machida said.

The previous record surplus of $844 million was counted during Gov. Neil Abercrombie’s administration at the end of fiscal year 2013.