Faced with an unprecedented plunge in state tax collections during the pandemic, Gov. David Ige in December crafted a proposed spending plan for the next two years that was packed with painful cuts, including the elimination and reduction of numerous positions.
Government leaders remain hopeful that President-elect Joe Biden may provide relief. But the state budget is still expected to overshadow almost every issue the Legislature takes up when its next session starts Wednesday.
The Hawaii Capitol has been closed to the public since March 19, when it shut down after state Sen. Clarence Nishihara tested positive for COVID-19. But lawmakers will gather there again this week amid heightened security that will include Hawaii National Guard troops.
Lawmakers say they will take up matters such as gun control, legalization of marijuana and law enforcement’s power to seize the assets of people who are accused of crimes, but the state budget crisis promises to be the dominant issue.
Ige’s budget features cuts to nonprofit agencies that provide vital social services across the state, a demand for furloughs for public school teachers and other public employees, and plans for layoffs of a small number of state workers.
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Furloughs and layoffs are particularly repulsive to the public worker unions, which wield considerable influence at the Legislature.
Ige’s budget relies on as-yet unspecified tax increases to cover state operating costs, but would still reduce overall expenditures. Hawaii economists, meanwhile, are anxiously urging the state to maintain or increase spending to help speed up the local economic recovery.
The hoped-for solution to all of that could be Biden, who rolled out a proposal Thursday for a new federal COVID-19 relief package that includes $350 billion to help states and municipalities to balance their budgets during the crisis. The implications for the budget crisis in Hawaii are huge.
Now that the balance of power in the U.S. Senate has shifted to the Democrats, expectations are high that Biden can push through his new $1.9 trillion relief package with enough money in it to help bail out Hawaii state government.
Senate President Ron Kouchi said last week that Hawaii state and county governments could be in line to receive something on the order of $1.25 billion under Biden’s “American Rescue Plan,” an amount similar to what was allocated under last year’s CARES Act to help Hawaii cope with the pandemic.
If that actually comes through, “we would be in a good place for the biennium,” Kouchi said. That means the actions of Congress and Biden in his first 100 days in office will be critically important in determining how much of Ige’s spending package the Legislature may have to accept.
More than $11 billion in federal funding has already been routed to Hawaii via the CARES Act and other pandemic relief bills that passed the Congress in the past year, but none of that money could be used to plug the hole in the state budget left by the decline in state tax collections.
U.S. Sen. Brian Schatz said he is making no promises or predictions about Biden’s proposed relief package, but said he told state lawmakers that “if they can buy a little bit of time here, and try to delay the most painful of decisions, that may be wise.”
“Under other circumstances, delaying painful fiscal choices can be characterized as irresponsible, but in this particular scenario, I think it’s more responsible to wait and see how the congressional process plays out over the next couple of months,” Schatz said in an interview.
House Minority Leader Gene Ward said Hawaii’s four Republican representatives will focus this session on four areas in 2021, including pandemic response, the economy, aid to businesses and the state budget hole.
Ward hopes that furloughs and most of the layoffs of state workers can be delayed, but wants the state government to get down “to what’s the core of our service,” noting the hundreds of millions of dollars of new debt the state has taken on in addition to an estimated $26 billion in unfunded liabilities for future retirement benefits.
Ward also said he’d like to see small businesses that have been hard hit by the recession given a general excise tax holiday. Nearly a quarter of all local businesses have closed since the pandemic began, according to a survey from the state Department of Business Economic Development and Tourism.
“For those that have their nose right down in the water, if we can push them to safety with a brief extension of the GET, we should do that,” Ward said.
Lawmakers will again take up measures to legalize recreational marijuana, with some hoping that the tax money that pot could bring in may help the state’s budget picture in the years to come.
Half the Senate signed on to a recreational pot bill in 2019 though the measure did not get very far in the chamber. Key lawmakers support recreational pot, but law enforcement and Ige do not.
Public support for weed is mixed. A Civil Beat poll in 2017 found that more than half of those under the age of 50 support recreational pot use, while most of those 50 years and older do not.
The toughest issue for lawmakers, however, would be figuring out how to set up the regulatory framework to make legal pakalolo a possibility. Sen. Karl Rhoads, who chairs the Senate Judiciary Committee, said recreational pot use should be regulated by the state Department of Health, similar to Hawaii’s medical cannabis program.
That way, medical dispensaries might also be able to sell recreational marijuana, he said.
Chances of recreational pot ultimately clearing the Legislature appear slim, and the chances Ige would sign such a bill are slimmer. But the tax revenue a program like recreational pot may generate could cause lawmakers to at least consider the measure.
“I don’t think it’s a quick fix, but it would be good to consider,” House Vice Speaker John Mizuno said.
At least one Senate committee plans to hold a hearing on a recreational pot bill if one is introduced.
A proposal to legalize gambling on Hawaiian Home Lands, while lacking support from legislative leaders and Ige, is also expected to receive a hearing in the Senate.
Lawmakers, effectively barred from passing anything that might cost money, are likely to bring at least some of their attention to an array of policy measures that could cost little or nothing at all.
“This is a year when non-fiscal policy will be at the forefront, because that’s all we can do,” Rhoads said.
Rhoads said there’s a good chance that stricter gun control measures could clear the Legislature. Last year, he introduced a measure that would prohibit people from buying ammunition without proof of a registered firearm.
Rep. Gregg Takayama introduced a measure to ban high-capacity rifle magazines. Those measures and others moved forward after the Diamond Head shooting that left two Honolulu police officers dead.
However, that bill stalled later in the session, with leaders in the House citing issues with grandfathering already-purchased rounds of ammunition. Both of those proposals could come up again, Rhoads said.
“Gun protection legislation is a prime example of things we can move because there’s really no money involved,” Rhoads said.
Lawmakers also plan to revisit reforms to Hawaii’s civil asset forfeiture program, which Ige vetoed in 2019.
The bill would have required law enforcement to secure a felony conviction before seizing someone’s property. Right now, a person could have their belongings seized even if they are not charged with a crime.
Sen. Joy San Buenaventura, an attorney and proponent of asset forfeiture reform, plans to reintroduce a bill similar to the one that cleared the Legislature two years ago.
“That will always be one of my priorities,” she told Civil Beat while campaigning for the Senate.
“Usually people whose assets are taken are those that can’t fight back; those are people that need assets the most,” she said.
Law enforcement seized about $1 million worth of assets in 2019, according to the latest data publicly available.
The State Capitol will remain closed to the public throughout the 2021 session, and security has been ramped up leading to opening day on Wednesday.
Crews put up barriers and chain link fencing around the entryways to the rotunda, and access for Capitol workers is restricted to one entryway through the basement.
Non-employees will not be allowed in lawmakers’ offices on opening day, according to a memo from Saiki and Kouchi. That’s a departure from the usual festivities when the Legislature convenes.
For the first time in state history, all committee hearings and floor sessions will be streamed live on YouTube. And while the public won’t be allowed to testify in-person, individuals can still testify remotely via Zoom.
That’s a significant change from years past, when only two committee hearings could be broadcast on public television at once due to broadband limitations. Remote testimony could also save a trip to Oahu for those living on neighbor islands.
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