2019 Hawaii Legislative Watch: Debt

Last week, I highlighted five Reports to the Legislature about what government accomplished last year. Those reports were from the Department of Taxation (DOTAX), Public Housing Authority (HPHA), Executive Office on Aging (EOA), Office of Hawaiian Affairs (OHA), and Honolulu Authority for Rapid Transportation (HART).

 

The report that caused me the most confusion and unease is the Statement of Total Outstanding Indebtedness of the State of Hawaii and the Statement of the Debt Limit of the State of Hawaii as of July 1, 2018, prepared by the Depart of Budget and Finance.

 

The Department of Budget and Finance oversees the general management of 1) State debt, 2) revenue bonds and special facility revenue bonds, and 3) the issuance and management of special purpose revenue bonds, or tax-exempt debt incurred by private parties pursuing qualified projects in the interest of the general public.

 

State debt includes reimbursable and non-reimbursable general obligation bonds, special assessment bonds, refunding bonds, mortgage credit certificates, short-term loans, certificates of participation, and municipal lease financings.

 

Hawaii had a total principal amount of outstanding indebtedness of $11.49 billion. Of this amount, $4.81 billion can be excluded under Article VII, section 13, State Constitution, making the excess of outstanding indebtedness over exclusions $6.67 billion as of July 1, 2018. Note: This does not include County debt.

 

The State of Hawaii has a debt limit of 18.5% of the average net general fund revenues of the three preceding years ending June 30 – currently, $1.36 billion.

 

Hawaii’s population of 1.42 million people is closest in size to Maine with 1.34 million people and New Hampshire with 1.36 million people, according to the US Census Bureau. How does Hawaii’s outstanding debt compare?

 

In 2016, the most recent fiscal year available from the US Census Bureau, Hawaii had a combined state and local outstanding debt of $15.38 billion, compared with $7.80 billion in Maine and $10.44 billion in New Hampshire. What is there such a big gap in public debt?

 

Debt can be good. Government debt can fund public projects, capital improvements, and respond to emergencies.

 

How much debt is too much? Are some types of debt better (or less costly) than others?

 

The 2019 Hawaii Legislature adjourns on May 2. Please think about these issues and how they may affect you, everyone around you, and future generations. Whether you have concerns or feel strongly about an issue, speak up, talk about it, and be part of the discussion!

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