When the House Finance Committee takes the first stab at crafting a budget for the next two years on Wednesday, the Hawaii State Energy Office’s funding is expected to be eliminated — at least temporarily.

And it’s not alone. Funding for several programs or offices will be eliminated, said Rep. Sylvia Luke, the Finance Committee chair. The idea is to start afresh, to effectively press the reset button on several state entities, Luke said. It’s the first step of a sweeping reform Luke plans to start implementing during this session.

On its face, the current House budget bill, introduced by Luke and House Speaker Scott Saiki, starts with last year’s budget and simply tacks on increases for certain fixed costs, like medical benefits for government employees. Among those is money for the energy office.

For instance, the bill calls for the energy office to get approximately $18.4 million from the state. But Luke said that money — and funding for other parts of the executive bureaucracy — probably won’t be there when the dust settles Wednesday.

“What will be passed out of the House is not what you see now,” Luke said. She did not speculate what level of funding the energy office ultimately might receive.

After years of biting at the edges of reforming the way the state government spends taxpayer money, Luke is now looking at a major overhaul. The idea eventually is to have agencies justify every discretionary dime they receive for each two-year budget cycle.

Up to now, the talk has been theoretical. The hearing will provide the first glimpse of how Hawaii’s fiscal watchdog plans to begin rolling out a major overhaul that’s expected to take years to implement fully.

The State Energy Office, which is part of the Department of Business, Economic Development and Tourism, is a case in point. Luke said lawmakers will introduce a separate measure to authorize funding for the energy office. Meanwhile, legislative subject matter experts are leading the charge to rebuild the office from the ground up.

Sen. Glenn Wakai, who chairs the Senate Energy, Economic Development and Tourism Committee, said he is drafting a bill “to totally reconstruct” the energy office, which was the subject of a scathing audit published last year.

The office’s website says the entity is “leading the charge” toward Hawaii’s goal of producing 100 percent of its electricity from renewable resources by 2045. But the state auditor’s report, which was published in January 2018, said it wasn’t clear what if anything the office was actually doing to move Hawaii forward.

“The Energy Office could not provide us with documentation that clearly articulates its projects’ expected contributions to these goals, let alone the data that supports such accomplishments,” State Auditor Les Kondo wrote in his summary of the audit. “We also found that the Energy Office’s strategic plan includes goals and targets that are unrealistic and may be impossible to achieve.”

In conclusion, the auditor found, “the Energy Office is not doing its job.”

In addition, the auditor found that the office’s funding, which comes from a tax on oil, won’t allow it to continue to operate at current levels.

Rep. Nicole Lowen, chair of the House Committee on Energy and Environmental Protection, said Hawaii had made progress but “to what degree the Energy Office has contributed to this progress is unclear.”

Contact Key Lawmakers

House Finance Chair Sylvia Luke
repluke@capitol.hawaii.gov
808-586-6200

House Committee on Energy and Environmental Protection Chair Nicole Lowen
replowen@capitol.hawaii.gov
808-586-8404

Senate Committee on Energy, Economic Development and Tourism Chair Glenn Wakai
senwakai@capitol.hawaii.gov
808-586-8585

Wakai said he and Lowen met with the energy office’s administrator, Carilyn Shon, on Friday to discuss the office’s performance.

Wakai said he was particularly concerned about the office’s funding, which comes from the oil tax. He said it will be better to shift the office’s source of funding to the state’s general fund, and added that he was perplexed by what he described as Shon’s apparent nonchalance that the office’s funding would diminish long before 2045.

“The fact that she didn’t see any sense of urgency was just baffling to me,” he said.

Alan Yonan, an energy office spokesman, said the office “is aware of its fiscal outlook and has undertaken a comprehensive plan to reduce expenditures.”

Yonan said the office wasn’t aware of Wakai’s plan to reshape the office.

The energy office is just one program whose funding Luke said may be cut from the current House bill and restored in other measures to be heard separately. The committee is also taking a hard look at funding for the Public Utilities Commission as well as the Agribusiness Development Corp.

Other entities within the economic development department also may be targets, Luke said.

Wednesday’s hearing comes as some officials are just settling into new jobs with Gov. David Ige’s administration. Denise Albano, the new agriculture director, just started her job on Tuesday and couldn’t comment, a department spokeswoman said. Likewise, Mike McCartney, Ige’s former chief of staff just last week stepped up as the new economic development director. Both are awaiting confirmation by the Senate.