You wouldn’t know it from his State of the State address, but Gov. David Ige does not plan to propose any “broad tax increase” this year, and is also walking back his proposal for layoffs of state workers.
The governor’s annual speech to the Legislature on Monday was an opportunity to make a case for his plans and policies, but Ige apparently decided to pass this year. He even neglected to mention bits of good news such as his decision to hold off on layoffs.
Instead, Ige offered up an online address that was almost devoid of specific, near-term policy proposals. It recapped some of the enormous problems the state faces along with steps the state has already taken to cope with the pandemic, and made a case there is reason to hope that things will improve.
While Ige mentioned some longer-term plans for building more housing, upgrading broadband infrastructure and seeking ways to diversify the economy, his content-lite approach was surprising at a time when much of the state is still in crisis.
Hawaii’s tourism industry is fighting for survival, unemployment remains painfully high, and just weeks ago Ige proposed both furloughs and layoffs of state workers.
His administration has also warned deep cuts are in the works for the nonprofit social services providers who are funded by the state, which would translate into less help for the people who have been clobbered by the pandemic and the economic fallout from it.
Ige didn’t mention most of that in his seventh State of the State speech on Monday, and ranking state lawmakers quickly panned Ige’s address. House Chairwoman Sylvia Luke described the governor’s speech as a “missed opportunity” to address some of the hard choices that lie ahead.
For example, Ige could have taken the opportunity to make a case for any tax increases he is planning to pursue, but he didn’t, she said.
“Right now people need clarity, and people need direction, and even if it’s bad news, we need to figure out how to deal with it together,” Luke said. “We are beyond, past that point where we’re worried about people’s reaction. What we need to do is be honest with the public.”
Leaders in the Senate were similarly disappointed the governor’s speech was light on details relating to tax increases. Senate President Ron Kouchi said his chamber may support a tax on “higher-wage earners.”
Ige told reporters after the speech that said lawmakers would get specifics when the administration bills are submitted to lawmakers. For the time being, he said, “we are not proposing broad tax increases in order to balance the budget. We don’t think it’s necessary at this point in time.”
He went on to explain the administration is looking at a new health care fee to raise state matching funds to increase the amount of federal funds the state can draw down for Medicaid, and also said the administration is “looking at, from a policy perspective, a sugar tax.”
Diabetes and obesity are huge health challenges for the state, he said.
“We have seen a sugar tax in other jurisdictions has really changed sugary beverage consumption, and certainly from a public health perspective we would be looking at introducing that legislation and seeing whether there is support for reducing the sale of sugary beverages, which has significant health impacts,” Ige said.
Just weeks ago Ige proposed layoffs of 149 state workers, but he told reporters after his speech Monday that “we are looking at trying to reassign workers in those areas that we are cutting so that we don’t end up with an explicit reduction in force.”
The layoffs were built into Ige’s proposed budget for the next two years, which was delivered to lawmakers last month. A spokeswoman for Ige said layoffs are “off the table” at the moment, but might be revived later.
The Senate is also working with the House on plans to restructure government agencies and reduce the size of government, lawmakers said.
“It is clear that we’re not going to have an economic recovery that can sustain government in its current form,” Kouchi said, adding that the Senate hopes to also minimize the impact to currently employed state workers.
Ige reminded listeners in his speech that Hawaii now has the lowest per-capita death rate from COVID-19 of any state as well as the lowest per-capita number of infections in the nation for the pandemic, adding that “we will continue to take the tough actions necessary to keep our community safe.”
He said he plans to ask lawmakers to make state land available for leasehold development of affordable housing — a proposal that was made last year — and said he plans to launch three school construction pilot projects “to serve as models for the schools of the future.”
He also said he plans to pursue longer-term plans for economic recovery, and to “reverse the brain drain.”
“We need to develop a clear vision for a more diversified and sustainable economy that is compatible with our culture and with our way of life,” Ige said in his address.
To that end, Ige said he asked House Speaker Scott Saiki, Senate President Ron Kouchi and businesses leaders to work with him on a “Hawaii 2.0” plan to upgrade the economy. Specific proposals from that initiative will be complete later this year, and ready for lawmakers to consider next year, he said.
Ige also proposed a new Broadband and Digital Equity office to oversee efforts to expand broadband access statewide.
Again, lawmakers were unenthused. They said more details on the broadband initiative would be helpful, and Saiki said creating new offices will be tough to justify as lawmakers attempt to consolidate and shrink state government.
“Consolidation means that it would be very difficult for us to create new programs or new offices, which is what the governor has requested through his state of the state,” he said.
And Saiki said working groups have already suggested ways to rev up the state economy.
“The administration has just refused to consider or implement those suggestions,” Saiki said. “I want to be positive, and I hope that the committee does a good job, but I just do not want it to end up being another exercise in analysis paralysis.”
Republican state Rep. Gene Ward said in a written statement that “I give Governor Ige kudos for the upbeat address this morning, using my suggested word ‘hope’ a total of 5 times.” But Ward said specifics and creative suggestions for economic recovery were “sparse.”
He added: “I heard no timelines when any of our major problems with our economy, the pandemic, and our huge budget deficit would be/should be expected to be curtailed or ended,” Ward said.
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