Gov. David Ige wants to invest heavily in fixing Hawaii’s roads, bridges, schools and harbors next year while creating additional housing, according to the supplemental budget request he sent Monday to the Legislature.
His proposal calls for a $1.5 billion increase in the overall capital improvement projects budget for fiscal year 2019, which starts July 1. Ige said the 215 percent increase is timed to take advantage of lower interest rates resulting from the state’s improved bond ratings.
Lawmakers will consider the governor’s supplemental funding request, which included only slight changes to the $14 billion operating budget, when the next legislative session starts Jan. 17.
“We see progress on complex issues, and this budget aligns our values and programs with those actions we know will make a difference,” Ige said.
The administration’s six-year financial plan, in which spending outpaces revenues until 2023, relies on a $1 billion carryover from last year. That surplus is estimated to be spent down to $164.2 million by 2023 but general fund reserves are being built up at the same time.
With support from the Legislature, Ige said, Hawaii’s rainy-day fund has increased to a point where it is one of 16 states with sufficient cash reserves to weather the “stress test” of another recession. There was $354 million in the reserves at the end of last fiscal year.
Those reserves and a more aggressive approach to addressing unfunded liabilities are two big reasons that bond-rating agencies gave Hawaii higher marks. Next year, the state will be pre-funding 100 percent of the retirement benefits promised to public workers, which the governor expects to save the state $1.6 billion over the next 20 years if the practice continues.
The state Council on Revenues has cautioned that the economy may be reaching the peak of its expansionary cycle, with construction growth expected to flatten through 2018. The governor’s budget notes a loss of 500 construction jobs over the first three quarters of 2017 as projects near completion in the Kakaako neighborhood on Oahu.
But the state economist, Eugene Tian, has calculated almost 14,000 new jobs as a result of the governor’s plan to spend $1.5 billion on capital improvement projects. Of those, 5,520 are expected in the construction industry.
Ige’s supplemental budget request calls for an extra $85.5 million, a 0.6 percent increase, in operating appropriations. That includes a half-million dollars for lifeguards on state beaches on Maui and Kauai, $2.8 million for school-based health services, $1 million for the Early College High School initiative, $4.5 million for kupuna programs, $800,000 for homeless outreach, $420,000 for eight sheriffs to support homeless and illegal camping operations.
“For the first time in eight years, there are fewer homeless people across the state — a decline of nearly 9 percent,” Ige said, referring to the latest point-in-time count. “We hope the state Legislature continues to support our efforts to put more families in homes and drastically reduce our homeless population.”
The budget request includes $15 million for housing programs for the homeless, including $5 million for property storage and trash removal, and an additional $100 million for other housing programs.
“Our efforts are paying off,” Ige said. “Since I’ve been in office, 5,300 units have been completed, 40 percent of them affordable. There are another 1,400 under construction and 4,500 units in the planning stages. Let’s build on our momentum.”
Ige took office in December 2014 after upsetting incumbent Neil Abercrombie in the Democratic primary. He’s expected to face another tough primary challenge in August against Congresswoman Colleen Hanabusa, which puts all the more pressure on the governor to deliver on his promises and further his initiatives.
The governor has touted how he fulfilled his pledge to cool 1,000 classrooms but other goals have been harder to track, such as doubling local food production by 2020. Ige has asked for additional money for his Sustainable Hawaii initiative, including $5 million for the Agricultural Loan Revolving Fund, $2.8 million for ag infrastructure improvements, $8.3 million for watershed protection, $7 million for land acquisition for forest reserve expansion on Oahu and Maui and $8.7 million for state parks infrastructure and improvements.
Here are other highlights from Ige’s supplemental budget request:
Read the full budget-in-brief here.