House panel’s $13.7B budget shows red ink

House Finance Chairwoman Sylvia Luke on Wednesday unveiled a proposed $13.7 billion budget for the coming year, but said she isn’t willing to commit just yet to some of Gov. David Ige’s most expensive spending initiatives.

Luke (D, Punchbowl- Pauoa-Nuuanu) said the latest draft of the state budget developed by the Finance Committee would have the state spending more money in the fiscal year that begins July 1 than it will collect in taxes and other revenues.

“That still continues to be a concern, and that’s why I continue to be very conservative and cautious when dealing with the budget,” she said.

Ige’s original budget proposal called for the state to spend $488 million more in the year ahead than the state collects in revenue.

The House has put a temporary hold on an Ige administration request for $164 million to pre-pay retirement health benefits for public employees. Ige has said banking that extra money now for future health fund costs will save the state millions of dollars in the long run, but Luke said, “I’m not ready to make that commitment as of yet.”

She will reconsider the pre-payment proposal later in the session.

Another item that remains unresolved in the new spending plan is Ige’s request that lawmakers set aside $100 million to deposit in the state’s “Rainy Day” budget reserve fund, Luke said.

“We may do something less or more depending on what the ending financial plan looks like” at the conclusion of the legislative session in May, Luke said of that proposal.

Yet another Ige initiative that is still up in the air is a request for $30.8 million to hire new employees under a negotiated settlement with the United Public Workers union.

That settlement requires that the administration terminate a number of contracts it has with private companies, and instead hire 502 public employees to handle that work for the state.

Luke said she budgeted only $642,000 to close out a handful of state contracts in the state Department of Public Safety because she is waiting for more information about the proposed conversion from private contracts to government employees.

Luke has repeatedly asked the administration for a list of the contracts that are supposed to be canceled under the agreement, but said she still does not have that information.

The spending plan that emerged from the Finance Committee on Wednesday does not include $160 million in construction funding to rebuild the Hawaii State Hospital in Kaneohe.

Luke said before she provides the money, she wants the state Department of Health to demonstrate it can move more quickly than it has in demolishing an existing building that is in the path of the project. “Let’s just see if they’re going to make progress before the end of session,” she said.

The latest budget draft would also eliminate 95 state government positions that have been vacant for more than two years. In a written statement, Luke said, “We are asking the departments to reassess the positions to see why they are so hard to fill. If we need to be more competitive with the private sector to attract quality employees, then we need to consider that.”

The budget will now go to the full House for a floor vote, and will then be considered by the Senate.