In an unusual move, Gov. David Ige found technical defects in all five bills state lawmakers passed in May to try to cope with the state budget shortfall and the COVID-19 pandemic, according to notices recently released by the Legislature.
He vetoed two, but three survived.
State tax collections have dropped sharply during the economic shutdown caused by the pandemic, and lawmakers reconvened on May 11 for about two weeks with plans to lapse funds, eliminate funding for vacant positions and substitute borrowed money for cash in an effort to free up enough money to balance the state budget.
Lawmakers said publicly they wanted to demonstrate that Ige could cover the cost of operating state government this year without imposing public worker pay cuts or furloughs, something Ige has said is still a possibility. As part of that effort the Legislature also authorized Ige in May to borrow up to $2.1 billion from the federal government if necessary to help the state pay its bills.
Lawmakers also transferred $1.3 billion into the state’s Emergency and Budget Reserve “rainy day” fund to ensure the Legislature had some say over how that money is spent, and the state Senate authorized a committee to issue subpoenas if necessary to force the administration to provide more information about its efforts to cope with the COVID-19 crisis.
One of the bills lawmakers passed during that testy May session was House Bill 1631 authorizing the state to issue bonds, but Ige vetoed the bill because he said lawmakers failed to take into account the administration’s plans to issue $100 million in general obligation bonds to raise money for construction projects in 2023.
He also imposed a line-item veto on Senate Bill 3139 to prevent lawmakers from transferring $432 million to the state’s “rainy day fund.”
Ige said that transfer to the budget reserve fund was improper because it was based on an assumption that cutting appropriations for the administration and the state Judiciary would automatically generate cash that can be moved around, when in fact reducing appropriations “does not represent cash.”
Ige allowed three other bills that passed in May — House Bill 2725, House Bill 2200 and Senate Bill 75 — to become law without his signature, saying he planned to work with lawmakers to make corrections to defects in those measures when the Legislature returned to the state Capitol in June and July.
In fact, lawmakers incorporated fixes to those bills in Senate Bill 126, which was approved by the House and Senate on June 26.
House Finance Committee Chairwoman Sylvia Luke said the veto of HB 1631 was actually because the administration decided after the bill passed to convert funding for the lava recovery effort on Hawaii island and the flood recovery on Kauai from cash to borrowed bond funding.
That move will free up about $100 million in extra cash to help cover the cost of operating state government this year, and the Legislature incorporated that fix into SB 126. Luke said she does not know why the veto message makes reference to a bond issuance in 2023, since lawmakers will have plenty of time in 2021 and 2022 to authorize more bonds if they are needed.
She said the line-item veto for SB 3139 simply means that money that will be saved from budget cuts to the administration and Judiciary will remain in the general treasury for Ige to use as he sees fit. “In my mind, it’s not a big deal. That’s why we let it go,” she said.
“This has been a very difficult time, and it took a lot of coordination, and these are unusual bills,” said Luke.
Even when lawmakers thought they had agreement with the administration, Ige’s staff came back and asked for additional changes. “That’s why I didn’t take it as them challenging the Legislature in any way. It’s just been really tough.”
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