Hawaii Gov. Neil Abercrombie’s 2014 State of the State speech on Tuesday was peppered with facts highlighting the progress that Hawaii has made under his administration.
Given that it’s an election year and Abercrombie is not shy about showcasing his accomplishments, Civil Beat decided to take a closer look to check whether the statements he made tell the full story.
Abercrombie touted the state’s financial condition on Tuesday, saying the state’s fiscal decisions over the last three years have “resulted in a general fund balance of $844 million in fiscal year 2013, a historically unprecedented figure that represents a turnaround of more than $1 billion since 2010.”
It’s not the first time the number has come up; the governor unveiled it last month during a luncheon at the Chamber of Commerce. It’s also the subject of his first campaign ad that came out over the weekend.
But lawmakers called into question whether Abercrombie should be taking credit for the $844 million surplus. Rep. Sylvia Luke, chairwoman of the House Finance Committee, said that her committee is double-checking the $844 million estimate.
She added that lawmakers have cut about $850 million from Abercrombie’s budget requests since he came into office.
“If we had funded everything the governor had requested from Day One, we wouldn’t be sitting on $850 million of carryover balance,” she said.
Sen. David Ige, who leads the money committee on the Senate side and is running against Abercrombie this election, also said in a press release that the money is the “direct result” of the Legislature’s cuts to Abercrombie’s proposed budgets, although he gave a more conservative estimate than Luke at about $800 million.
But Kalbert Young, the state finance director, said it’s wrong to suggest that the Legislature created the $844 million balance by not approving Abercrombie’s budget proposals.
The money represents the state’s actual revenues and expenditures in fiscal year 2013 as well as the general fund balance at the start of the fiscal year.
He said the biggest contributing factor was better-than-expected revenues in 2013. About $183 million was made up of money that the state didn’t spend.
In an interview with Civil Beat, Ige said the resulting surplus was achieved jointly.
“I suppose any balance really is a collective activity,” he said. “Obviously the executive is required to execute the budget. They can’t spend more than we authorize.”
Other lawmakers pointed out that the amount of money in the general fund isn’t a clear picture of the state’s fiscal condition. The general fund balance doesn’t include the $22 billion that the state owes in health and retirement benefits promised to state employees.
Sen. Sam Slom, the sole Republican in the state Senate, said Hawaii has a long way to go before it gets its finances in order, and that since the $844 million surplus was calculated for fiscal year 2013, many things could have changed.
Young agreed that the $844 million is a snapshot in time and that the state’s general fund outlook may be different since then. But he said that while the state should be concerned about its unfunded liabilities for pensions, that doesn’t mean it is not currently in a good financial state.
As for the general fund balance being “historically unprecedented,” Young said, “It’s only large in terms of the dollar amount, it’s not the largest in terms of the amount of a percentage of the general fund revenues.”
He said that during the Lingle administration, the state achieved a general fund balance of about $700 million that was a larger percent of general fund revenues.
Abercrombie also highlighted the state’s low unemployment rate to illustrate his economic achievements. “Our unemployment has improved to the fifth lowest in the nation,” he said.
According to Nov. 2013 data from the Bureau of Labor Statistics, Hawaii is tied for the fifth lowest unemployment rate in the nation at 4.4 percent along with Iowa, Vermont and Washington. That’s an improvement over 5.3 percent a year previously.
But some economists say that figure gives a misleadingly positive description of employment of Hawaii. Many workers in Hawaii hold multiple jobs and part-time jobs, making the unemployment rate just one part of the picture.
The percentage of multiple job-holders in 2012 in Hawaii was 6.2 percent, higher than the national average of 4.9 percent. The state doesn’t keep data on part-time job holders but a recent study found that that number has been rising.
Hawaii’s U-6 unemployment rate — which includes workers who are forced to work part-time for economic reasons and people who have been discouraged from looking for jobs — stands at 11.3 percent. That’s still lower than the national average, but much higher than 4.4 percent.
In addition to emphasizing his accomplishments, Abercrombie advocated heavily to raise the state minimum wage, listing a number of statistics to stress his point.
“Currently, 21 other states plus the District of Columbia have higher minimum wage rates than Hawaii while our minimum wage earners are confronted by much higher living costs,” he said.
According to the U.S. Dept. of Labor, that’s true: 21 states plus the District of Columbia have minimum wage rates higher than the federal wage level, while Hawaii is one of several states that keeps the federal wage rate.
Washington’s minimum wage is 29 percent higher than Hawaii’s at $9.32 but the cost of living there is 55 percent lower, said Bill Kunstman, spokesman for Department of Labor and Industrial Relations. Kunstman used data from U.S. Department of Labor and Missouri Economic Research & Information Center Cost of Living Data Series from the third quarter of 2013 to calculate the difference.
Similarly, in Nevada, minimum wage of $8.25 is 14 percent higher than Hawaii but cost of living is 64 percent lower. And Oregon’s minimum wage is 26 percent higher than Hawaii at $9.10 but cost of living there is 49 percent lower.
To learn more about Hawaii’s high cost of living, read Civil Beat’s series, Living Hawaii.
To bolster his minimum wage argument, the governor also asserted: “The last four times the minimum wage was raised, on average, the number of jobs increased by 2.2 percent over the following 12 months.”
Kunstman from the state Department of Labor and Industrial Relations said the statistics are from the department’s research branch.
He said that 15,700 jobs were added in the 12 months following the minimum wage increase from $4.75 to $5.75 on Jan. 1, 2002. The number of jobs also increased by 15,000 in the year after the wage rose from $6.25 to $6.75 on Jan. 1, 2006.
Kunstman added that 2,900 of the jobs added in 2002 were in the food service and accommodations industry. While on average jobs increased by 2.2 percent over 12 months following the minimum wage change, jobs in that industry grew at a higher rate.
When discussing Hawaii’s prison population, Abercrombie said that at the start of his term, “nearly 2,000 prisoners were in Mainland facilities. At the end of the last fiscal year, we reduced that number by 600.”
In Dec. 2010, the month that Abercrombie came into office, the number of prisoners on the mainland was at 2,006, according to the Department of Public Safety. As of Jan. 13, that number was down to 1,393 prisoners.
Read an analysis of the governor’s speech by Civil Beat chief political reporter, Chad Blair.