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The chair of the House Finance Committee is so disappointed with the governor’s budget that she suggested the administration withdraw it and start over.
That’s what Rep. Sylvia Luke told Budget and Finance Director Wes Machida on Thursday at the Capitol.
The reason for Luke’s pique was that Machida did not appear to have factored in a lower tax revenue forecast. For that reason, the current draft of the budget is significantly “over-budgeted,” she said.
Machida was testifying about the governor’s budget proposal just a day after the Council on Revenues dropped growth projections by 2.5 percentage points. It means that the state now has $155 million less to work with this session.
Luke’s said Machida should have seen it coming before he and Gov. David Ige submitted their $28.5 billion two-year budget plan last month.
Luke and Sen. Jill Tokuda, chair of the Senate Ways and Means Committee, warned at the time that the revenue had already flattened.
They questioned whether there would be enough general fund money to fulfill the governor’s priorities of education, innovation, housing and food sustainability along with essential social services and unfunded liabilities — not to mention pay raises for public workers and capital improvement projects.
Machida told Luke and Tokuda at a joint budget briefing that he planned to meet with the governor to “reassess” the budget. He expressed optimism that tax collections in December and January would show an uptick, and that he would report back to the legislators soon.
But the money chairs were not done with Machida.
Tokuda said she was “curious” how the administration went about drawing up the budget. She described it as “very odd” that there were a number of what she called requests for “arbitrary” lump sums of $10 million — one for the Department of Education, for example, and another for the University of Hawaii.
“That does not reflect prudence,” said Tokuda. “That reflects padding.”
She said it was almost as if the administration thought it was still Christmas and there were plenty of gifts to place around the tree.
Machida defended the budgeting process, saying the administration had asked state departments to prioritize their needs. He explained that the governor’s approach was to balance competing interests such as federal and state mandates and health and safety.
But Tokuda said Ige and Machida had put lawmakers “in a difficult position” by not providing them with a “real budget.” She said she and her colleagues would be forced to assume the role of the “bad guy” who has to make tough decisions.
Budget briefings began Wednesday with members of the Senate Ways and Means Committee voicing concerns about the UH budget.
Both money committees have scheduled dozens of briefings, either jointly or individually, through Jan. 23.
But it is already clear that there will be a lot more difficult discussions as first the House and then the Senate redraft the budget before sending it back to Ige in March.
Ige’s chief of staff, Mike McCartney, pointed out that the executive and legislative branches are not dealing strictly with the governor’s budget, or the House’s, or the Senate’s.
“This is going to be the state budget,” he said, expressing confidence that all parties could work together to craft a spending plan that is in the best interest of all.
One nagging concern, though: What about pay raises for 14 collective bargaining units?
Lawmakers again expressed surprise no money was allocated in the governor’s budget for the unions whose contracts expire soon: the Hawaii Government Employees Association, the United Public Workers, the Hawaii State Teachers Association, the University of Hawaii Professional Assembly, the State of Hawaii Organization of Police Officers and the Hawaii Fire Fighters Association.
Tokuda also questioned McCartney about why the state has yet to hire a chief labor negotiator.
Machida said the administration was “stress-testing” how a 1 percent across-the-board wage increase over the next two fiscal years would impact the overall numbers. It would amount to $85 million in general funds for each of the years.
But there no longer is a $1 billion surplus from the summer to play with — and the bottom line is the budget as drafted calls for spending more than will be taken in.
Luke and Tokuda are sharpening their shears.