Hawaii State Government Slow to Pay

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“It may hold up the whole rest of the job,” he says. “If it’s a legitimate change, you go ahead and do the work.”

But problems occur when cash-strapped agencies can’t come up with the money out of their own budgets or if state government is slow to release project money.

“That added money has to come from somewhere,” says Lyons. “Sometimes that has to go back to the Legislature.”

That scenario presents another set of problems, given the budget gaps faced by legislators and administrators. Departments may not want to admit a project went over budget in seeking more money, contractors say.

Contractor M.J. says he’s had retention payments go uncollected for as long as five years. The vendors can bill interest or get attorneys involved, but K.D. says most people don’t go that route for fear of hurting future chances for work.

“If you charge them interest it makes them look bad, and you know what happens next time,” he says.

The situation may change as Gov. Neil Abercrombie’s new administration settles in, given his pledge to seek solutions from government workers and make the state more efficient. Abercrombie also wants to quicken Hawaii’s economic recovery, and putting more state money into the private sector would help that recovery.

It also appears the new governor is aware of the late payments to both nonprofits and for-profit vendors. One of Abercrombie’s first acts after being sworn in on Dec. 6 was to announce he would release $23.7 million from the Rainy Day Fund to pay off past-due bills submitted by nonprofits. That included $350,000 owed to Catholic Charities of Hawaii, $300,000 to the Kapahulu Center, and $150,000 each to the Moiliili Center and the Waikiki Community Center.

Abercrombie noted that his administration would work expeditiously to move the funds through the state procurement process and pledged to get the money to the organizations as quickly as possible.

As Abercrombie prepared to take over in late November, his staff said he was going to address obstacles in the procurement payment process. Part of the new governor’s economic plans rest on stoking the economy to raise tax revenues.

“Slow payment from the state is much more than an inconvenience,” said a statement released by Abercrombie’s staff just prior to the inauguration.

“When dollars aren’t flowing smoothly into the private sector there are payroll problems, credit challenges and it puts a strain on the overall business climate.”


Big Problems for Hawaii's Nonprofits




More Nonprofit Woes



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