The Hawaii Senate Ways and Means Committee on Wednesday restored $212 million in general funds that the House had cut last month from Gov. David Ige’s proposed $13.28 billion state spending plan for the next two years.

The latest version of the budget pleased some department heads and lawmakers in the standing-room-only conference room at the Capitol, especially those who have been advocating for $55 million to complete the Kona courthouse project. Senators agreed with the House and kept the funding.

But it left many others with concerned looks, including University of Hawaii President David Lassner. The university is facing a relatively flat budget for the coming biennium despite requests for millions of dollars to help cover soaring electricity costs, a deficit in the Athletics Department and federal mandates.

Senate Ways and Means committee Chair Senator JIll Tokuda gestures during hearing. 1 april 2015. photograph Cory Lum/Civil Beat

Senate Ways and Means Committee Chair Jill Tokuda gestures during a hearing on the state budget Wednesday.

Cory Lum/Civil Beat

The budget now goes to the full Senate for its approval. The differences between the House and Senate versions will then be hammered out by a joint conference committee later this month.

“The Senate Draft 1 that we will be voting on today is the result of a disciplined approach to budgeting that excludes placeholders for later deliberation, reflects tough decisions made based on sound justifications, identifies and supports legislative priorities and brings us to a positive budgetary target faster than we had planned while still providing for required constitutional tax refunds and budget reserve deposits,” Sen. Jill Tokuda, who chairs the Ways and Means Committee, said during the morning hearing.

The Senate draft comes in $14.7 million below Ige’s executive request, which was hundreds of millions of dollars less than departments said they need for the next two years.

“Essentially, this is a bill that the governor could sign into law tomorrow,” Tokuda said.

“This is a bill that the governor could sign into law tomorrow.” — Sen. Jill Tokuda

Even with the cuts, the state budget would grow almost 5 percent in fiscal year 2016, which starts July 1, and nearly 10 percent in 2017. The bulk of the increases are due to collective bargaining costs, health premiums and retirement benefits for public workers.

When considering all means of financing — which includes special funds, federal aid and other sources of revenue for the state — at about $26.3 billion the Senate’s budget is $143.2 million less than the administration’s proposed $26.4 billion overall biennium budget. The House draft is $25.7 billion.

Senators had more money to work with in the budget because the state Council of Revenues slightly upgraded its fiscal forecast last month. The council now predicts 5.5 percent growth in general fund revenues for the next four years. For the current fiscal year, that amounts to roughly $55.7 million in additional revenue, which compounds over the next few years.

Tokuda said the improved revenue forecast and spending restraint will enable the state to reach its target of spending less money than it takes in by the end of this fiscal biennium, an improvement over previous financial plans.

The state has thought it would be spending more money that it’s taking in until 2018, rapidly depleting its $844 million carryover balance from 2014.

Senators Give Governor Control Over IT Projects

This is the first legislative session for Tokuda to shepherd the budget bill as chair of the Ways and Means Committee, a role Ige had until stepping down from the Senate to run for governor last year.

She heaped praise on Senate staff members for their work over the past few weeks.

“Going through the process for the very first time has been extremely humbling as I have quickly come to understand the depth and magnitude of our financial obligations and the challenges that come with balancing this with supporting priority needs we have as a state,” Tokuda said.

While lawmakers have kept the vast majority of Ige’s proposed budget intact, Tokuda made a couple significant changes.

The most notable is giving the governor’s office control over information technology projects.

“I have quickly come to understand the depth and magnitude of our financial obligations.” — Sen. Jill Tokuda

With departments’ demands for IT projects increasing, Tokuda wanted to give Ige centralized control in an effort to “break down the silos between government departments, increase operational and financial efficiency and increase transparency.” The Senate budget provides the governor’s office with $10 million in each of the next two years, roughly 75 percent of what was requested.

Another issue the House and Senate will have to resolve is how to fund the University of Hawaii.

The House made a sweeping change by giving the UH administration centralized control over how to allocate $369 million currently budgeted at all the campuses in the system.

The Senate isn’t so sure it wants to consolidate funding in a lump sum like that, which Tokuda called a “purist approach.” Its version of the budget adds $6.8 million in 2016 and $6.4 million in 2017 for systemwide support through “performance-based funding.”

Tokuda said it’s time the entire UH system looks at not just getting taxpayer money handed to it but actually having to earn it.

Lump sum or not, Lassner said it’s “not a substitute for an adequate level of funding.”

Senate CIP Budget Murky For Now

It’s unclear how much money the Senate wants to put toward capital improvement projects over the next two years.

The House draft includes $1.47 billion for 2016 and $755.3 million for 2017 in CIP funding. Ige has proposed $1.28 billion for 2016, $758.6 million for 2017.

Sen. Ron Kouchi, the Senate’s point person for the CIP budget, said he did not want to get into the specifics of the projects because it’s still subject to negotiation with the House.

The Senate communications office did not know how much the overall CIP budget was.

Vice Chair Senate Ways and Means Committee, Senator Ronald Kiuchi at the Capitol. photograph Cory Lum/Civil Beat

Ways and Means Vice Chair Ron Kouchi, who’s overseeing the CIP budget for the Senate this session, listens during the hearing Wednesday.

Cory Lum/Civil Beat

More budget details will become available when the Ways and Means completes its committee report on House Bill 500, the state budget bill. The House committee report and testimony on the bill are available online here.

In general, Kouchi said the Senate draft of the CIP budget addresses repair and maintenance of schools and hospitals, affordable housing and environmental sustainability among other issues.

Kouchi did share two specific projects funded in the Senate draft, one of which being the $55 million appropriation for the new Kona courthouse.

The Legislature has already approved $35 million for the project. Senators told Judiciary officials Wednesday that they must get it done within that $90 million budget and need to get bids out within the next two years or risk losing the funding.

Kouchi also noted $5 million in each of the next two years for public housing and $40 million in revenue bonds for the Turtle Bay conservation easement.

Sen. Sam Slom, the chamber’s lone Republican, said he appreciates the direction the Senate has taken with the budget but has his reservations.

“Instead of thanking each other and slapping each other on the back, we should be thanking the taxpayers because they are paying for all of this,” he said, adding that he doesn’t believe the budget does anything to lower Hawaii’s high cost of living.

Sen. Kalani English said the budget reflects the Senate majority’s focus on food and energy resiliency, homelessness and government efficiency. He added that Hawaii’s cost of living would be significantly higher if the rest of the U.S. was not subsidizing the state so much.

Sen. Donovan Dela Cruz, another member of Ways and Means, said House Bill 500 is just one bill. He encouraged his colleagues to consider other bills this session that would look at ways the state can generate revenue by leveraging its own assets, particularly land.

“It can’t just be the budget committee doing all the heavy lifting,” he said.

Senate Budget Highlights

A Senate news release highlights these funding provisions in its draft of the budget:

Department of Agriculture

  • $2 million in general funds in FY2016 for agricultural loans
  • $250,000 in each FY for the prevention and treatment of Macadamia Felted Coccid
  • $220,000 in funds and adding four (4) positions for increased pesticide enforcement, surveillance, and education

Department of Accounting and General Services

  • Add four positions and $113,000 in FY2015 and $227,000 in FY2016 in special funds for State Foundation on Culture and the Arts
  • Add $500,000 in revolving funds in each FY for the replacement of motor vehicles  

Department of the Attorney General

  • Add $500,000 in general funds in each FY for vacancy savings reductions that will allow the department to fill vacancies in a timelier fashion, resulting in more responsive service for clientele
  • Add $132,000 in general funds in each FY to establish the Hawaii Sexual Assault Response and Training Program

Department of Business, Economic Development and Tourism

  • Support low-cost financing of clean energy technology by adding five positions and $1 million in special funds in each FY
  • Add one position and $29,000 in FY2016 and $60,000 in FY2017 in general funds to protect State interests through a Transit-Oriented Development planner

Department of Budget and Finance

  • Add one position and $44,919 in FY2016 and $84,499 in FY2017 in trust funds to support Wellness programs to improve health outcomes for employees and reduce costs associated with overtime and health insurance payments
  • Add the following amounts for debt-service, health benefits, retirement benefits, University of Hawaii Professional Assembly collective bargaining, and Other Post-Employment Benefits six-month delay: Debt Service ($3.4 million FY2016; $55.6 million FY2017); Health Benefits ($87.4 million FY2016; $216.3 million FY2017); Retirement Benefits ($65.5 million FY2016; $99.8 million FY2017); UHPA ($18.8 million FY2016, $36 million FY2017 in general funds; $2.1 million FY2016, $3.9 FY2017 in non-general funds); OPEB delay ($862,161 in FY2016)

Department of Commerce and Consumer Affairs

  • Add five positions and $258,000 in FY2016 and $516,000 in FY2017 in special funds for mortgage loan originator and service regulation support
  • Add three positions and $169,000 in FY2016 and $316,000 in FY2017 in special funds to support public utility regulatory activity as well as $3.5 million in FY2016 and $731,000 in special funds to complete the renovation and expansion of the Public Utilities Commission offices

Department of Defense

  • Add six positions and $219,000 in FY2016 and $347,000 in FY2017 for the Hawaii Air National Guard Campus
  • Add $778,000 in general funds and $1.6 million in other federal funds in FY2016 for the state’s veterans cemetery
  • Add $1.5 million in general funds in FY2016 to replenish the Major Disaster Fund

Department of Education

  • Add $9,000,000 in general funds in each FY for utilities.
  • Add $3,600,000 in general funds in each FY for hard-to-fill teaching positions
  • Add $2,400,000 in general funds in FY2016 and $8,000,000 in general funds in FY2017 for the weighted student formula
  • Add $5,100,000 in general funds in FY2016 and $4,600,000 in general funds in FY2017 for the school food services
  • Add $7,400,000 in general funds in FY2016 and $5,000,000 in general funds in FY2017 for school transportation services

Charter Schools

  • Add $5,800,000 in FY2016 and $5,500,000 in FY2017 in general funds for per pupil funding for charter school students
  • Create a new program ID, transfer-in positions and $2,004,550 in federal funds, and add $1,400,000 in each FY in general funds for the State Charter School Commission in accordance with Act 122, SLH 2014

Early Learning

  • Add seven positions for the Early Learning Prekindergarten Program for programmatic support

Libraries

  • Add one position and $847,000 in FY2016 and 10.5 positions and $441,000 in FY2017 in general funds for the new state-of-the-art Nanakuli Library, scheduled to open in 2016
  • Add $500,000 in each FY in general funds to address the backlog of critical health and safety maintenance and repair for all libraries statewide

Department of Hawaiian Home Lands

  • Add $4,400,000 in general funds in each FY for compensation of 80 positions in DHHL
  • Add $2,200,000 in general funds in each FY for fringe benefits to employees
  • These appropriations are intended to meet the constitutional requirements for sufficient funds, allowing DHHL to utilize their trust funds in service to their beneficiaries.

Department of Human Services

  • Add $3,000,000 in general funds in each FY for the maintenance and operations of the state elderly and family public housing facilities
  • Add $4,100,000 in general funds in each FY for Autism Spectrum Disorders treatment for keiki covered by Medicaid
  • Add $11,500,000 in general funds in each FY for Medicaid recipients with the chronic Hepatitis C virus infections
  • Add $1,200,000 in FY2016 and $342,000 in FY2017 for increase support for the Temporary Assistance for Needy Families work programs and contracted services for eligible families

Department of Health

  • Add $4,100,000 in general funds in each FY for Kupuna Care
  • Add two positions and $852,000 in FY2016 and $761,000 in FY2017 to the Aging Disability Resource Centers project coordination for Oahu, Maui, Kauai, and Hawaii Island
  • Add $1,750,000 in general funds in each FY for Hawaii State Hospital for in-unit security guards to deter violence and assaultive behaviors and adding $2,997,000 in each FY for support for the Hawaii State Hospital
  • Add four positions and $40,000 in FY2016 and $84,000 in FY2017 in general funds for increased vector control at ports of entry on Maui and Hawaii Island

Hawaii Health Systems Corporation

  • Add $21,000,000 in general funds in each FY to address shortfalls for the collective bargaining underfunding, fringe benefit rate increase, and revenue loss due to ICD-10

Department of Labor and Industrial Relations

  • Add two positions and $16,000 in FY2016 and $34,000 in FY2017 in general funds to improve inspection quotas of federally required benchmarks for the Hawaii Occupational Safety and Health program
  • Add $200,000 in each FY in general funds for the Premium Supplementation Fund to provide the program with the necessary funding to reach its intended clientele

Department of Land and Natural Resources

  • Add $4,000,000 in each FY in general funds for the Hawaii Invasive Species Council
  • Add $3,000,000 in each FY in special funds for albizia eradication and control along public highways
  • Add $2,000,000 in each FY in special funds for the watershed protection program
  • Add $750,000 in FY2016 in general funds for the Statewide Fire and Natural Disaster Response Program
  • Add $1,000,000 in special funds in each FY for the Hawaii State Parks

Department of Public Safety

  • Add $1,900,000 in FY2016 and $2,100,000 in FY2017 in general funds to address the shortfall in the supplies budget resulting from food staple rate increases and religious food requests
  • Add $3,100,000 in FY2016 and $2,700,000 in FY2017 in general funds to covers costs associated with the transfer and housing of inmates out of state while essential repairs and upgrades are completed

Department of Taxation

  • Add $200,000 in general funds in FY2016 for the Tax Review Commission

Department of Transportation

  • Special maintenance projects for all airports, harbors and roadways by adding $121,000,000 in special funds in FY2016 and $119,000,000 in special funds in FY2017
  • Debt Service payments of $204,000,000 in special funds in FY2016 and $292,000,000 in special funds in FY2017 for airports special fund and harbors special fund
  • Add $500,000 in special funds each FY for the Van Pool Program
  • Add $921,000 in special funds each FY for the operation of the zipper lane

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