The Sequestration Impact Response Team on Wednesday submitted its final report to Gov. Neil Abercrombie. The team, led by Kalbert Young, the state's budget director, recommended improved data collection, adding $5 million to the $15 million set aside for sequestration by the Legislature, an effort to keep the existing military presence in Hawaii, and preserving revenue for nonprofits.
Abercrombie created SIRT in April to analyze the impact on Hawaii of the automatic federal budget cuts meant to control the deficit. The state has predicted that the overall economic impact is $684 million this year, a small part of the state's gross domestic product, but enough to cause discomfort for many nonprofits and businesses that rely on spending by civilian defense workers.
From the report's foreword:
The spending cuts resulting from the Budget Control Act of 2011 will adversely impact Hawaii’s economy, but reduced funding is likely just the beginning of a new reality of diminishing federal support for states and municipalities. Actually, sequestration is not an entirely new experience. Other sectors of the economy have often dealt with shortfalls in revenues, resulting from downturns in the economic engines that feed our economy.
In response to these conditions, many in the private sector have had to alter their business processes to be more efficient and productive, to lower costs in the face of declining revenues. Companies have had to adapt to these economic realities to survive. And, many companies have learned that they can not only survive but thrive by improving processes, better serving their customers or constituents, and being fiscally responsible.
Government must do likewise! Government should carefully examine existing processes and practices for opportunities to improve efficiency and productivity. But, such re-engineering must be done without adversely impacting Government’s overall responsibilities to the community. In fact, there should be an important focus toward making it easier for all sectors of the economy to survive and thrive.
Hopefully, sequestration will be a catalyst for reinventing government. With the realization that declining federal support will impact the whole community, state government must find ways to help everyone deal with the new realities. Government must help by simplifying and facilitating approvals, eliminating barriers, reducing costs and encouraging business development and innovation for all sectors in the economy.
This report contains findings and recommendations to deal with the immediacy of the sequestration of federal funds. But, it will hopefully serve as just the beginning of a collaborative framework to improve government and foster the continued economic vitality of our beautiful state.