State Senate President Shan Tsutsui, in an guest column submitted to the Star-Advertiser, defends a successful bond sale by the Abercrombie administration in November against attacks by former Lingle administration officials that the gains from the sale are misleading.
Tsutsui (D, Wailuki-Kahului), who used to oversee the budget for state construction projects in the Senate, described the criticism from the Lingle camp as “careless, irresponsible and terribly misleading.”
In particular, he said Gov. Neil Abercrombie’s decision to ask lawmaker approval to tap the state’s rainy day and hurricane relief funds to get through the last fiscal year was because of a deficit he inherited from former Gov. Linda Lingle. The governor has asked lawmakers to use some of the proceeds of the bond sale to replenish the emergency funds.
Secondly, an indictment was made against the use of Hurricane Relief and Rainy Day funds to help balance the State budget and, perhaps more importantly, that the repayment of these monies is to come from funds borrowed by the bond sale.
However, what the former Lingle Administration members fail to acknowledge is the fact that the need for the use of Hurricane Relief and Rainy Day funds was necessary to close out the Lingle Administration’s FY11 budget, a problem inherited and not created by the Abercrombie Administration. Governor Abercrombie’s decision to use those funds was also coupled with the strong commitment to restore those funds, a commitment that he has already undertaken.
Also, despite what has been depicted, it is my understanding that the recapitalization of the Rainy Day Fund and the Hurricane Relief Fund is not from monies derived from additional long-term debt, as some that are apparently unfamiliar with the details of the transaction, have misstated. Instead, the monies are the result of additional proceeds from the bond sale. The strength of Hawaii’s transaction actually allowed for the bonds to be sold at a premium collecting more than $100 million in additional proceeds– meaning, that the State was able to collect $900 million in funds while garnering $800 million in debt. That additional $100 million represents investors’ strong desire to invest in Hawaii’s future and, therefore, it is prudent to use this unanticipated revenue to recapitalize the reserves. The result of the transaction in this one area alone is reason to celebrate.