S&P: Hawaii’s Credit Rating Hinges on Its Ability to Follow Through on Funding Measures

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A major credit rating agency on Tuesday heaped praise on Hawaii for taking some big steps this past legislative session to get its finances in order over the next several years.
 
But Standard & Poor’s credit analysts said they are worried that spending is growing too fast.
The budget for next year that lawmakers approved in May, which Gov. Neil Abercrombie signed, is almost 11 percent higher than last year’s. This comes at a time when the average total personal income growth is less than 5 percent since 2000.

S&P said Hawaii’s moves to pre-fund public worker health benefits and replenish reserve funds are aggressive, but should have quite favorable results for the state’s credit profile.

“A key to the state’s future credit trajectory likely hinges on its ability to follow through on its (other post-employment benefits) funding measures when revenue growth ebbs lower,” S&P said in its report.

Abercrombie said in a statement Tuesday that S&P is the first rating agency to publicly recognize the significance of the state’s efforts and “milestone legislation.”

Read S&P’s full report here, and check out past Civil Beat reporting on the state’s unfunded liabilities here.

— Nathan Eagle

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Nathan Eagle/Honolulu Civil Beat
Hawaii Gov. Neil Abercrombie and Finance Director Kal Young appear at a press conference, March 1, 2013.

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