The document discusses Hawaii's strategies for managing state debt, including an annual debt affordability study published by the Department of Budget and Finance. It outlines Hawaii's state debt limit as defined in the state constitution, calculates the debt limit and outstanding indebtedness for the fiscal years 2019, 2018, and 2017. The debt limit is calculated as 18.5% of the average general fund revenues for the preceding three fiscal years. As of July 2020, outstanding indebtedness was $11.9 billion while the debt limit was $1.4 billion. The governor expresses confidence in Hawaii's ability to recover from the economic impacts of the COVID-19 pandemic through resilience, responsibility and working towards a common goal.

1. STRATEGIES FOR MANAGING STATE DEBT
The Pew Charitable Trusts, June 2017
<https://www.pewtrusts.org/en/research-and-analysis/reports/2017/06/strategies-for-managing-state-debt>
HAWAII
In June 2015, Hawaii lawmakers passed legislation directing the Department of Budget and
Finance to publish an annual debt affordability study. The department released the first one in
December 2016, after the deadline for inclusion in this report's analysis. But an initial review
of the study shows that it aligns with many of Pew's recommendations: It has a statutory
requirement for publication and uses multiple metrics and extended projections. Like all
affordability studies, it also has room for improvement. The benchmarking comparison group,
for example, could be more narrowly tailored.
HAWAII STATE CONSTITUTION
ARTICLE VII, SECTION 13
DEBT LIMIT; EXCLUSIONS
Section 13. General obligation bonds may be issued by the State; provided that such bonds at
the time of issuance would not cause the total amount of principal and interest payable in the
current or any future fiscal year, whichever is higher, on such bonds and on all outstanding
general obligation bonds to exceed: a sum equal to twenty percent of the average of the general
fund revenues of the State in the three fiscal years immediately preceding such issuance until
June 30, 1982; and thereafter, a sum equal to eighteen and one-half percent of the average of
the general fund revenues of the State in the three fiscal years immediately preceding such
issuance.
Effective July 1, 1980, the legislature shall include a declaration of findings in every general law
authorizing the issuance of general obligation bonds that the total amount of principal and
interest, estimated for such bonds and for all bonds authorized and unissued and calculated for
all bonds issued and outstanding, will not cause the debt limit to be exceeded at the time of
issuance. Any bond issue by or on behalf of the State may exceed the debt limit if an emergency
condition is declared to exist by the governor and concurred to by a two-thirds vote of the
members to which each house of the legislature is entitled. For the purpose of this paragraph,
general fund revenues of the State shall not include moneys received as grants from the
federal government and receipts in reimbursement of any reimbursable general obligation
bonds which are excluded as permitted by this section.
__________________________________
STATEMENT OF THE DEBT LIMIT OF THE STATE OF HAWAll
AS OF JULY 1, 2020
SUMMARY
Average net general fund revenues of the three preceding years
ending June 30, 2018, 2019, and 2020
$7,732,619,741
Debt limit percentage 18.50%

2. Debt limit $1,430,534,652
Less:
Total amount of principal and interest payable on outstanding general obligation
bonds in highest debt service year (Fiscal year ending June 30, 2022)
$753,610,056
Difference obtained by subtracting from the debt limit the total principal and
interest payable on outstanding general obligation bonds in highest debt
service year
$676,924,596
__________________________________
STATEMENT OF TOTAL OUTSTANDING INDEBTEDNESS
THE STATE OF HAWAII AS OF JULY 1, 2020
<https://budget.hawaii.gov/wp-content/uploads/2020/11/2020-Outstanding-Indebtedness-conformed-sig.pdf>
Outstanding indebtedness
General obligation bonds
– Non-reimbursable general obligation bonds $ 7,254,013,119
– Reimbursable general obligation bonds 50,584,945
Total general obligation bonds $ 7,304,598,064
Revenue bonds 3,448,402,372
Special purpose revenue bonds 1,233,859,919
Total principal amount of outstanding indebtedness $ 11,986,860,355
Exclusion from outstanding indebtedness under Article VII, section 13, State Constitution
– Reimbursable general obligation bonds $ 50,584,945
– Revenue bonds 3,448,402,372
– Special purpose revenue bonds 1,233,859,919
– General obligation bonds maturing in the current fiscal year 778,649,097
– Other constitutional deductions 600,000,000
Total exclusion from outstanding indebtedness $ 6,111,496,333
Excess of outstanding indebtedness over exclusions $ 5,875,364,022
_________________________________
STATEMENT OF THE DEBT LIMIT OF THE STATE OF HAWAll
AS OF JULY 1, 2019
<https://budget.hawaii.gov/wp-content/uploads/2019/11/2019-Debt-Limit-Stmt-Conformed-Sig.pdf>

3. SUMMARY
Average net general fund revenues of the three preceding years
ending June 30, 2017, 2018, and 2019
$7,637,553,253
Debt limit percentage 18.50%
Debt limit $1,412,947,352
Less:
Total amount of principal and interest payable on outstanding general obligation
bonds in highest debt service year
(Fiscal year ending June 30, 2020)
$806,508,831
Difference obtained by subtracting from the debt limit the total principal and
interest payable on outstanding general obligation bonds in highest debt
service year
$606,438,521
__________________________________
STATEMENT OF TOTAL OUTSTANDING INDEBTEDNESS
THE STATE OF HAWAII AS OF JULY 1, 2019
<https://budget.hawaii.gov/wp-content/uploads/2019/11/2019-Outstanding-Indebtedness-Stmt-Conformed-Sig.pdf>
Outstanding indebtedness
General obligation bonds
– Non-reimbursable general obligation bonds $ 7,175,341,349
– Reimbursable general obligation bonds 54,491,715
Total general obligation bonds $ 7,229,833,064
Revenue bonds 3,236,993,684
Special purpose revenue bonds 1,322,111,509
Total principal amount of outstanding indebtedness $ 11,788,938,257
Exclusion from outstanding indebtedness under Article VII, section 13, State Constitution
– Reimbursable general obligation bonds $ 54,491,715
– Revenue bonds 3,236,993,684
– Special purpose revenue bonds 1,322,111,509
– General obligation bonds maturing in the current fiscal year 521,328,229

4. Total exclusion from outstanding indebtedness $ 5,134,925,137
Excess of outstanding indebtedness over exclusions $ 6,654,013,120
__________________________________
STATEMENT OF THE DEBT LIMIT OF THE STATE OF HAWAll
AS OF JULY 1, 2018
<https://budget.hawaii.gov/wp-content/uploads/2018/11/Conformed-Sig-2018-Debt-Limit.pdf>
SUMMARY
Average net general fund revenues of the three preceding years
ending June 30, 2016, 2017, and 2018
$7,359,330,450
Debt limit percentage 18.50%
Debt limit $1,361,476,133
Less:
Total amount of principal and interest payable on outstanding general obligation
bonds in highest debt service year
(Fiscal year ending June 30, 2020)
$786,230,762
Difference obtained by subtracting from the debt limit the total principal and
interest payable on outstanding general obligation bonds in highest debt
service year
$575,245,371
__________________________________
STATEMENT OF TOTAL OUTSTANDING INDEBTEDNESS
THE STATE OF HAWAII AS OF JULY 1, 2018
<https://budget.hawaii.gov/wp-content/uploads/2018/11/Conformed-Sig-2018-Indebtedness.pdf>
Outstanding indebtedness
General obligation bonds
– Non-reimbursable general obligation bonds $ 7,135,698,429
– Reimbursable general obligation bonds 58,254,635
Total general obligation bonds $ 7,193,953,064
Revenue bonds 2,956,438,310
Special purpose revenue bonds 1,335,471,599

5. Total principal amount of outstanding indebtedness $ 11,485,862,973
Exclusion from outstanding indebtedness under Article VII, section 13, State Constitution
– Reimbursable general obligation bonds $ 2,956,438,310
– Revenue bonds 3,236,993,684
– Special purpose revenue bonds 1,335,471,599
– General obligation bonds maturing in the current fiscal year 467,022,081
Total exclusion from outstanding indebtedness $ 4,817,186,625
Excess of outstanding indebtedness over exclusions $ 6,668,676,348
__________________________________
STRENGTH THROUGH ADVERSITY
It took many years for the State and the nation to recover from economic shocks of lesser
magnitude, such as September 11th
and the Great Recession. This worldwide health crisis adds
levels of complexity that increase the uncertainty and, perhaps, the time needed for recovery.
This pandemic has caused us to take a step back to refocus and recognize what is truly
important to us. We must be personally responsible because our lives – and those of our
family and friends – depend on it. We must care for our kūpuna and the most vulnerable.
We are making progress towards managing the pandemic in the islands. We are at the point
where we can begin taking greater steps towards reviving our economy and strengthening our
communities. The availability of vaccines to prevent COVID-19 and promising new treatment
options bring hope that we will recover from this pandemic.
Together, we can get through this. We must draw on the resiliency and foresight of our
ancestors and work to rebuild the lives of Hawai'’s people and strive to make them better than
before. Adversity often brings out the best in us, the strength and ingenuity that we did not
know we had.
We have a unique opportunity to reshape Hawaii for the future and make it stronger and more
resilient. Like our parents and grandparents, we want the best for our families. There is no
limit to what we can accomplish when we work towards a common goal.
It may not be easy, but we are committed. Now more than ever, we must do the right thing,
the right way, for the right reasons.
Sincerely,
DAVID Y. IGE
Governor of Hawaii