Abercrombie makes an argument for ‘spaving’, spending to save the State

Beth-Ann Kozlovich

HONOLULU—Three months into the tenure of a new governor and just past the midpoint of the legislative session, are we indeed paddling the canoe Gov. Neil Abercrombie spoke of in his State of the State Address in January?

Beginnings are tender times, but the beginning of his term found us in rough times in which getting agreement about his “honest accounting of our government” in part depends on a willingness to dispense with entitlement sensitivities.

“The issue really isn’t an argument of how much you’re entitled or even if you’re entitled and we can arm wrestle over that,” Abercrombie says. “Even if you are [entitled], if the tidal wave is hitting, it’s a moot argument. This is a question of how we survive, how do we make this work. The conversation that I intend to keep on having with the people of the state is how can we work together to meet the obligations.”

We are, however, entitled to honesty and straightforward talk. The Governor is quite clear that means moving off NIMBYism in any form, whether that concerns energy, retirement funds, and keeping more of Hawaii’s money in Hawaii. Especially on the heels of last week’s Council on Revenues (COR) revised forecast, which dropped 2.5 percent from the previous forecast, the Governor says the honest accounting and spending of the State’s money has become more acute.

“We’re not going to play any tricks on people,” Abercrombie says. “We’re not going to pretend you’re not entitled to your tax returns for example. The deficit in terms of projected revenue shortfall for the biennium is now approaching $1 billion—just in order to stay even, not even to meet requirements of unfunded liabilities and retirement system or meeting projected costs for medical care premiums. It’s serious business. ... The words I used in my inaugural remarks and in my State of the State speech have been confirmed by the COR in the sense that we have to face up to what we need to do together in a whole series of areas to meet our fiscal responsibilities as adults.”

Those responsibilities go beyond the formidable challenge of balancing the budget. And although Abercrombie also said in the State of the State address that “our challenge is to ensure that our values and priorities are reflected in the decisions we make and actions we take,” we’re still stuck trying to decide what those core values and priorities really are. Or to be more precise, what the proper role of government in Hawaii should be.

“Do children need to be taken care of? I think so,” Abercrombie says. “We’re adults, we can take all kinds of grief but that shouldn’t be foisted on kids who are utterly dependent on us to exercise good judgment on their behalf. Are seniors entitled to a dignified existence, a level of sustainability commensurate with the contributions they’ve made during their productive work life? And the answer, I think, is yes. The question then becomes how do we provide that.”

Not unexpectedly, his barometer harkens back to a few—some would say better—generations.

“If we don’t share the sacrifice, then we’re all doomed.”

“It’s interesting that a nation, and particularly in Hawaii, in which one generation’s sacrificing for another had been the norm, has now been transposed to ‘I’ve got mine, why should I have the slightest concern for you?’” Abercrombie says. “Because that’s a form a privatism as opposed to individualism that will destroy the capacity of you as an individual to sustain yourself. If we don’t share the sacrifice, then we’re all doomed. It’s a reexamination that’s required of what constitutes our obligation to each other as opposed to our capacity to indulge ourselves personally.”

Translated: We need to shift our mindset to the necessity for the collective good and do it quickly. So is the Legislature’s response in sync with this?

“Not in the exact numbers, but they are being addressed in the manner in which I envisioned it,” Abercrombie says. “The questions of retirement, overtime, and how a pension is established, the question of various taxation issues are less important in terms of individual items. ... It’s useless to get into an argument about a particular approach. What we’re really talking about are structural changes that need to be made ... how are we going to address the questions of meeting our financial obligations? Inevitably we’ll have to look at our taxation policies. Whether it’s raising taxes or fees or recalibrating how we do our taxation, the sign of a democracy is the capacity of a people to govern themselves. That means you have to come up with the funds to do it.”

If you’re shaking in your slippahs in anger or fear about your taxes going up, Abercrombie says the State’s obligations have changed even in the time since his campaign began in earnest. And he makes an argument for “spaving”—spending now to save down the line.

“When people say you promised this or that or said this or that six, 12, 18 months ago, well, in that time, for example, 18,000 children were added to Medicaid rolls for which the State is responsible for providing healthcare,” Abercrombie says. “If we don’t do that, they wind up in the ER. It [becomes] cost shifting in a way that actually increases our liability financially. So sometimes restoring a few jobs actually ends up saving the State money and giving increased value to the taxpayer for the dollars that are being expended.”

What he won’t do, he says, is just increase taxes for the sake of plugging budget holes.

“Even if you took the GET, given the financial crisis we had, you could increase it say 2 percent,” Abercrombie explains. “To do what? To fill in the deficit puka? That barely gets you to the starting line. That doesn’t do anything about the structural requirements for medical premium payments or meeting our unfunded liability for the retirement system.”

Better to take advantage of cheap money to cut Hawaii’s 6.3 percent unemployment in half, he says, and “put people to work in jobs that have genuine social utility.”

Philosophically, one may debate the merit of spaving our way to prosperity, or at least to a point of incentivizing consumer spending, which will ramp up the GET. But it’s the social utility part to which the Governor clings, and yes, so what if there are shades of FDR here? And while he still believes unions also have utility, they may not get off so lucky either though with the spectre of Wisconsin—he treads lightly about the second-hand lessons Hawaii can learn courtesy of that state.

“It’s the idea that our diversity defines us rather than divides us, that in Hawaii we try to do things in a pono way,” Abercrombie says, “that we work together to try to resolve our common problems in a way that recognizes that there may be disagreements as to how we do it. But in the end, we agree we’re going to do it in a way that reflects consideration for each other.”

And that’s the real issue. Can we agree with more than lipservice and will the Legislature be able to demonstrate a fairness principle that will appeal to Hawaii’s basic good nature? And when the taxes do go up as surely they must, will their use be transparently recognizable as taking care of the common good? 

The entire hour-long, uninterrupted conversation with Gov. Neil Abercrombie is on the Town Square archive at www.hawaiipublicradio.org. More topics covered in the interview include the HECO strike and the fallout over Sen. Daniel Akaka’s announcement that he will step down following the conclusion of his current term. Reach Beth-Ann Kozlovich at [email protected]