The state Senate unveiled a new two-year budget Wednesday that would slightly cut back on Gov. David Ige’s proposals, but would still increase state spending to record levels next year.
The Senate budget draft would shave about half of 1 percent from the $13 billion budget proposed by Ige for the year that begins July 1, and would trim a bit more than half of 1 percent from Ige’s proposal for the following year.
Senate Ways and Means Chairwoman Jill Tokuda described the Senate proposal as "a disciplined approach to budgeting" that reflects "tough decisions made based on sound justification."
Ige and state lawmakers have expressed concern that state government spending in recent years has been outpacing state tax collections and other revenue. That pattern has required that the state spend down some of its cash reserves each year.
Tokuda said the Senate budget proposal would allow the state to begin taking in more revenue than it spends by the end of the upcoming two-year budget cycle. That is partly because the state Council on Revenues last month issued new and more optimistic projections for state tax collections in the years ahead. The council includes economists and other experts tasked with projecting future state tax collection.
Ige and lawmakers have said state costs are increasing largely because of obligations to state workers that are increasing annually for health care, retirement benefits for public workers and for negotiated raises for public employees.
The Senate draft of the budget underscores that point by adding nearly $61 million to the budget over the next two years to pay for raises and other costs associated with collective bargaining increases won by the University of Hawaii Professional Assembly.
Tokuda, (D, Kailua-Kaneohe), also said the Ways and Means Committee has become concerned about an array of requests for information technology projects across state government, and decided to transfer authority for funding all of those projects that the committee could identify to the governor’s office.
Tokuda said the committee identified information technology projects that would cost more than $100 million over their project lifespans, which raised concerns that those separate requests would move forward without central oversight to ensure efficiency and compatibility between the systems.
"You can imagine the concern that this committee had, and these are only the projects that we are currently aware of," Tokuda said. "This is not the totality of all the information projects that are in existence at this particular time."
To deal with that issue, the Senate budget includes $10 million per year for IT projects for the next two years in the governor’s budget so Ige can decide which projects are priorities, and which should be funded.
Last month, the House announced that its draft of the budget would test out a new budget approach for the University of Hawaii system by making more than $369 million available to the university in a single budget classification, and letting university officials and the Board of Regents decide how to distribute that money around the sprawling UH system.
The Senate budget does not embrace that idea, and instead would generally continue the traditional method of having the Legislature specify the amounts of funding given to different components of the university system by spelling out those instructions in the budget.
However, Tokuda said the Senate proposal would set aside more than $13 million over the next two years that could be used for "performance-based funding" that would be distributed under a system that would be developed by the university president and the Board of Regents.
The proposed Senate budget draft also includes $21 million for the network of state hospitals that includes Hilo and Maui Memorial Medical Centers to cover cash shortfalls due to public worker raises and other costs.
Sen. Sam Slom, the Senate’s lone Republican, said he was glad the budget does not include any tax increases, but also said it does not include any tax reductions.
Slom (R, Diamond Head-Kahala-Hawaii Kai) gave his colleagues on the Ways and Means Committee a brief and mild scolding, telling them "instead of thanking each other and slapping each other on the back, we should be thanking the taxpayers, because they have to pay for all of this."
