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The Honolulu Advertiser
Posted on: Wednesday, May 30, 2007

ON THE MONEY TRAIL
The big picture: billions in liabilities

By Jim Dooley
Advertiser Columnist

Sometimes sniffing out scandals on the money trail distracts even the most intrepid hound from the big picture.

So this week I pause from tracking down consultant contracts and lobbyist deals to consider some overall budget numbers.

This is prompted in part by yesterday's front-page story reporting that government budget deficits around the country — at the federal, state and local levels — now total $59 trillion.

The budget numbers, compiled by USA Today, noted that much of the government shortfall comes from what are called "unfunded liabilities" in pension and healthcare funds. That's what we know we're going to have to spend in the future to cover pension and medical care obligations but have not bothered to fund yet. Imagine 59 trillion chickens coming home to roost.

The federal government doesn't count future pension and medical care liabilities when compiling its budget, but the analysis published yesterday did include them and noted that state and local governments around the country are now being required to include those cost items in annual budget reports.

So I took a look at the most recent reports detailing unfunded government liabilities in Hawai'i.

The Legislature noted recently that an extra $11.1 billion will be needed to pay for "retiree healthcare services" over the next 30 years.

"To put this amount in perspective, this is over twice as large as the state's annual general fund budget," legislators said.

As Advertiser reporter Greg Wiles (a diligent money tracker in his own right) noted in one report on the subject, lawmakers said they learned of the liability too late this legislative session to do anything about it right away.

"It's not something you have to fix overnight, nor can we fix it overnight," Sen. Rosalyn Baker, D-5th (W. Maui, S. Maui), told Wiles.

Then there's the Employees Retirement System, which handles pension payments for retired state and county employees.

As of June 30, 2006, there was a $5.1 billion unfunded liability there, according to the ERS.

Legislators passed a measure this year increasing taxpayer contributions to the ERS that would eliminate the $5.1 billion deficit "over a reasonable length of time of approximately 29 years."

If you know that a particular money trail will lead to boondoggle, excessive spending or white elephants, reach Jim Dooley at 535-2447 or jdooley@honoluluadvertiser.com