Gov. David Ige touted his achievements during his first two years as governor in his State-of-the-State speech to lawmakers today, but warned the state economy has slowed, and “adjustments” will be required in his proposed two-year $28.5 billion budget.
Ige noted that tax collections were expected to grow by 5.5 percent this fiscal year, but actual tax revenue has grown by just six-tenths of 1 percent in the first six months of the year.
“The economic assumptions on which the budget was based have changed, and we will have to make adjustments,” Ige said.
Ige did not specifically describe those adjustments, but said he will propose an increase in state payments into the public employees pension fund. The Employees Retirement System, which provides benefits to more than 120,000 employees and retirees, earlier this month announced that its unfunded pension liability for state and county employees and retirees was a whopping $3.67 billion more than had been previously calculated.
To help cope with that extra cost, Ige said he will phase in a series of increased payments “to ensure that we keep our promises to our retirees in a responsible way.”
Ige said he intends to expand the Early College Program that helps high school students to obtain college credits, saying that “studies show that this may be one of the most powerful tools to advance college enrollment and success among our public high school graduates — especially for lower-income and first-generation college students,” Ige said.
Ige also said he will purchase more electric cars for the state using money from up to $10 million in payments to the state under a legal settlement with Volkswagen for alleged emissions fraud.
Ige did not specifically mention his plans to increase the state’s gasoline tax, weight tax and registration fees, but said he wants to work with lawmakers to “find the funding to make significant upgrades to increase safety and reliability” in the state’s highway network.
Lawmakers last year rejected Ige’s plan to increase those taxes to fund highway improvements, but Ige promised to re-introduce those tax increase proposals again this year.
The city plans to ask lawmakers this year to extend the half-percent excise tax surcharge for Oahu to provide more money for the city’s rail project, and Ige said he plans to work with the city and the Legislature to find enough money to complete the rail system.
“This will give us a more comprehensive approach to traffic congestion on Oahu for the long term,” he said.
Ige’s speech mostly steered clear of dramatic new initiatives such as “Cool the Schools,” which he unveiled in his speech last year. That plan to install air conditioning or other equipment to cool 1,000 classrooms by the end of last 2016 turned out to be a disappointment for the administration.
Ige convinced lawmakers last year to appropriate $100 million for the plan, but unexpectedly costly bids by contractors contributed to delays, and shortly before New Years Day Ige reported that work had been completed in only 164 classrooms with bids have been awarded for another 207.
However, Ige said his new budget includes $61.7 million to continue the “Cool the Schools” effort, adding that “we haven’t lowered our sights.”
Ige also said he will propose a new “invasive species authority” to oversee efforts to protect the Hawaii environment from invasive species, but provided few details. He said his budget includes $18.4 million to protect watersheds, forests and oceans from invasive species.
Ige said his administration helped to reduce homelessness in Kakaako by two-thirds, and said his new budget proposes to spend $20.9 million per year for rent subsidies, supportive services, outreach services and enforcement to cope with homelessness.
State funding for homeless prevention allowed 4,200 to stay in their homes and avoid homelessness, and helped to spur a 25 percent reduction in evictions, Ige said.
Ige also praised his administration’s efforts to speed renovations in public housing units so they can become available for occupancy more quickly. He said his proposed budget includes $59 million for additional public housing improvements, and said his budget proposes to invest $123.4 million in new housing starts.
Ige also pitched his administration’s efforts to steer Hawaii into the “innovation” sector.
The governor has included $5 million per year for each of the next two years to support the work of the Cancer Center of Hawaii, and praised the state’s HI Growth program to encourage high-tech entrepreneurs. He said that program has helped to fuel 145 start-ups with $10 million in state funds, and those start-ups attracted $250 million total investment.
“Together, we must pursue our own self-made opportunities through education, innovation and entrepreneurship,” Ige said. “We must tap our greatest resource, our people, to find our way to the next great economic transformation: the development of an innovation sector.”