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.
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.
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.”
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.
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.
A Senate news release highlights these funding provisions in its draft of the budget:
Department of Agriculture
Department of Accounting and General Services
Department of the Attorney General
Department of Business, Economic Development and Tourism
Department of Budget and Finance
Department of Commerce and Consumer Affairs
Department of Defense
Department of Education
Department of Hawaiian Home Lands
Department of Human Services
Department of Health
Hawaii Health Systems Corporation
Department of Labor and Industrial Relations
Department of Land and Natural Resources
Department of Public Safety
Department of Taxation
Department of Transportation