Cut State Jobs, Keep Tax Cuts? Hawaiʻi Senate Makes Budget Pitch
Faced with federal budget cuts, lawmakers hope to balance the budget in part by wiping out positions that have been vacant for more than five years.
The Hawai‘i Senate will once again try to eliminate funding for vacant state government positions this year as part of its effort to balance the budget and preserve the state income tax cuts that were promised to working families two years ago.
Earlier this year Gov. Josh Green proposed a “pause” in the income tax cuts scheduled to roll out over the next five years, but both the House and Senate are trying to continue those tax cuts for lower- and middle-income families.
Senate Ways and Means Chair Donovan Dela Cruz said Wednesday that recent events, including the war in the Middle East and damage from the Kona low storms last month, reinforced the importance of the Senate’s plan to preserve those tax cuts. The ongoing war is increasing gas and electricity prices, and thousands of residents are still cleaning up from intense flooding.
Dela Cruz announced highlights of the proposed Senate supplemental budget for next year on Wednesday, outlining plans to abolish positions that have remained unfilled for five years and to lapse the unspent money back into the general fund to help balance the state budget.
The Senate’s proposed operating budget for next fiscal year totals almost $20.14 billion when state, federal and special funds are included, he said, and the proposed construction budget is nearly $4.65 billion.
The House has proposed a slightly larger budget of nearly $20.47 billion for next year. That compares with a $19.77 billion budget for the current fiscal year that ends June 30. The two chambers will iron out differences later this month.
Federal Impact
The proposed Senate version of the budget includes $30 million to cope with the One Big Beautiful Bill Act passed by Congress and signed into law by President Donald Trump last year, which reduced federal income taxes but also reduced federal support for food aid and medical care for the poor.
Dela Cruz said that money will be used for “system requirements and staff augmentation” to maintain services for low-income residents in the face of the federal cuts.
The Senate budget proposal attempts to capture underutilized funds to provide essential public services, he said, including lapsing unused funding at the end of each fiscal year. Dela Cruz said that strategy will produce savings of more than $240 million.
The Senate’s draft budget proposes another cost-cutting step by eliminating long-term vacant positions in state government to save $17 million. Eliminating additional vacancies that are not in active recruitment will generate additional savings of $26 million, Dela Cruz said.
Dela Cruz has proposed cuts in staff vacancies before with limited results. Last year, for example, the Department of Human Resources Development recommended wiping out 419 civil service positions that had been vacant for more than four years, but lawmakers abolished only 66.
If lawmakers are more aggressive about abolishing vacancies this year, that could have a major impact on state departments.
In some cases state departments are unable to fill highly skilled jobs such as engineering positions because the pay is too low, and the departments use money from budgeted vacant positions to fund overtime, emergency hires or other costs.
That means Dela Cuz’s announcement will almost certainly trigger a lobbying scrum by departments as they try to preserve funding for many of the vacancies.
One issue where the House and Senate budget proposals differ is the handling of many of the green fee projects to fund environmental protection and tourism-related initiatives and cope with climate change. Those projects are to be financed with an increase in the state hotel room tax from 10.5% to 11%.
The governor requested funding for a list of green fee projects totaling $126 million, but proposed issuing bonds to borrow money to finance many of those projects. The House went along with that idea, financing more than $42 million of the green fee initiatives with borrowed money.
But the Ways and Means Committee objected to that idea, and none of the Senate’s green fee projects will be funded with bonds. Instead, Dela Cruz said Wednesday the green fee money will be deposited into the special land and development fund under the Department of Land and Natural Resources.
Sen. Sharon Moriwaki, vice chair of the Ways and Means Committee, said that money will then be distributed to various state departments to execute the projects.
In other budget highlights, Dela Cruz said the Senate budget proposal would commit $1.82 million to fund the next step in a schedule of raises developed by the state Salary Commission, which voted last year to recommend raises of 35% to 48% over six years for judges, top state executives and lawmakers.
The Senate draft would provide a $50 million cash infusion into the Major Disaster Fund, Dela Cruz said, which most recently paid for hotel room stays last month for people displaced by the Kona low storms.
Dela Cruz said the Senate budget proposal would also provide $2 million to update the state’s National Disaster Economic Recovery Strategy, which was published by the state planning office in 2010.
Both the House and Senate are proposing to authorize the Department of Business, Economic Development and Tourism to spend $6 million for further exploration of geothermal resources to produce power, with a focus on drilling at test sites on Maui, Big Island and Oʻahu.
The Ways and Means Committee unanimously approved the Senate budget proposal, which now moves to the full Senate for a vote.
Leading lawmakers from the House and Senate will then meet in conference committee to try to hash out the differences between their drafts before the scheduled end of this legislative session on May 8.
