Just before the close of the fiscal year, Gov. Josh Green stepped in with a $49,000 solution to a budget problem that threatened to expose Lt. Gov Sylvia Luke to possible liability and removal from office.

Luke had overspent her budget because she chose to pay her staff significantly more than her predecessor had – all without the money to pay for it. 

On June 30, the last day of the fiscal year, Green authorized the use of general funds to make up the difference so that Luke could make payroll, according to a memo obtained by Civil Beat via a public records request. 

Luke declined an interview request. In a statement to Civil Beat, she confirmed her office needed a last-minute infusion of cash.

“In an abundance of caution, the Attorney General and the Director of Budget and Finance worked with our office to ensure we ended the fiscal year without a deficit,” she said.

Green’s office declined to comment.

The bailout from Green provides both financial and legal relief for Luke. 

State law says any government officer who makes expenditures in “excess of an allotment … shall be deemed guilty of neglect of official duty and shall be subject to removal from office.” Violators are liable to the state for the amount overspent.

The Attorney General’s Office said it is not aware of this law ever being enforced. Green’s assistance means Luke is off the hook. 

According to state law, “the question of whether an officer, employee, or member of any department or establishment makes an excessive expenditure is measured at the end of the fiscal year,” the Hawaii Attorney General’s Office said in a statement to Civil Beat. 

“If the department or establishment is in the black at the end of the fiscal year, then there is no violation.”

Luke made changes to her department’s salaries after she took office in December. The deputy chief of staff position, which used to pay about $104,000, now pays $130,000. What were once administrative assistant jobs with salaries between about $40,000 and $60,000 are now director-level gigs paying $60,000 to $80,000.

In an interview last month, Luke said she needed top-notch staff in place to start tackling her priorities, including the expansion of preschools and broadband.

The lieutenant governor knew right away the money wasn’t there. In January, Luke told state lawmakers she wasn’t going to be able to make payroll. At the time, she said if it became necessary, she would take a cut from her own salary to make ends meet.

“The only person who might not get paid for a few months would be me,” she told legislators. “So I may have to go and do extra work somewhere.” 

Budget and Finance Director Luis Salaveria said this week he never got a directive to dock Luke’s pay.

Luke had hoped the Legislature would come to her rescue. When it didn’t, she asked the state Department of Budget and Finance in May to plug the hole. 

That request set off a firestorm of criticism. Some found it ironic that Luke would require a bailout given that she was known for holding members of the executive branch accountable for their budgets during her years as chair of the House Finance Committee.  

“It seems embarrassing to me, for someone who has built her reputation on having a mastery of the state budget and fiscal responsibility and management,” Colin Moore, a political scientist with the University of Hawaii Economic Research Organization, said this week.

“It strikes me a bit like writing a check you can’t cover today assuming the money will be in the account at the time it gets cashed.” 

Following the backlash, Luke told Civil Beat she found the money in her budget to cover her expenses. She said her office was owed reimbursements from the Department of Public Safety for costs she fronted for her security detail. The amount aligned almost exactly with her deficit, she said. 

That plan didn’t work out after all, although Luke didn’t explain why in her statement this week.

“We were hoping the reimbursements would close the gap but the most prudent approach to reconcile the budget was by a transfer of funds,” she said in her statement.

The situation appears to be highly unusual. While some departments have required an infusion of cash at the last minute to cover emergencies, Salaveria said he couldn’t think of a time it was to cover staff raises.

“I can’t recall anything at this time,” he said.

In her statement, Luke expressed regret. 

“As I have said before, I hold myself to a higher standard than this,” she said. “This was a lesson for our office and going forward, I will continue working within the administration to move important initiatives forward within the parameters imposed by revenue forecasts.” 

Beth Giesting, director emeritus of the nonprofit Hawaii Budget and Policy Center, said she’s skeptical.

“I think it was a learning opportunity for her to find out there is probably going be more transparency about issues like this than some of the stuff that happened within the walls of her office on the Finance Committee,” Giesting said.

After the new fiscal year began, Civil Beat’s editorial board on July 5 asked Luke how it all worked out – days after Green approved the bailout. 

Luke indicated the situation was resolved but did not mention Green had stepped in. 

“Right now we’re still reconciling, but we should be fine,” she said. 

Luke’s budget for the new fiscal year is $2.3 million – more than double her office’s allotment for the previous fiscal year. But Luke told the editorial board she and Green have agreed she won’t spend it all. The reason, she said, is “we are asking all the departments to be frugal and prudent.”