Cautious budget raises questions

There have been a few performance blips in the state’s bedrock tourism industry — a prolonged hotel-workers strike and a catastrophic volcanic eruption on Hawaii island both caused a dip in revenue. But even those setbacks seemingly did not deal a grievous blow to the Hawaii economy, which is still humming along fairly nicely.

So why did Gov. David Ige craft his generous biennial budget by keeping $100 million off to one side? After all, the fiscal 2020 allotment is fatter by 7.2 percent over the current appropriations.

Unlike previous governors, Ige has based his calculations on an assumption that tax revenues will come in lower than what the state Council on Revenues officially projected.

The governor said he is not expecting a downturn, but did note that tax collections have run below official projections for part of the year. Further, nationally there has been talk that a recessionary cycle is overdue.

So Ige is doing “the responsible thing,” as he termed it in his written explanation, to hold some funds in reserve until better numbers come in.

Financial officials assembling a biennial budget have to look at least a short distance into the murky economic future, armed with only the information at hand.

Laurel Johnston, director of the state Department of Budget and Finance, said the unknowns include some of the public employee unions’ units that have not arrived at a settled figure, so those cost items could not be included on the ledger.

That shouldn’t mean $100 million is up for grabs through collective bargaining. Johnston said the governor is well aware that pay hikes also result in increasing retirement costs for the labor force, and the state is still paying down its unfunded liabilities there.

Taxpayers also must rely on lawmakers to play their constitutional role. Within weeks, legislators will start their work shaping the spending plan for the next two years.

They seem poised to do so. Leadership is proposing a new “performance-based budgeting” approach when the Legislature convenes. That would be welcome.

Operating budgets now stand at $15.47 billion for the 2020 fiscal year, with $15.7 billion pegged for 2021. Ige’s outlined priorities are basically rational, but legislators still must conduct a tough-minded review of the major existing programs, as well as critique the new proposals.

These are among the fiscal plans:

>> Ige wants to spend $315 million for affordable housing over the biennium. This continues the trajectory of last session’s program launch, fueled by a $200 million one-year investment.

It’s good that he’s generally keeping up the financial pace, given the state’s critical housing shortage. The taxpayers, though, need a status report of how many units are in development through leveraging this money.

>> Some spending is prompted by legal pressures. The Hawaii chapter of the American Civil Liberties Union has taken the state Department of Education to court over violating Title IX requirements by failing to provide girls’ athletics with needed facilities.

Ige proposes to spend $38.2 million for girls’ locker rooms in high schools. The state’s commitment to deliver equity in male and female athletics is a day late and a dollar short — or two — but it’s still good to see officials make this initial gesture.

>> Some spending is prompted by unanticipated opportunity. Johnston said the $125 million allotment of matching capital improvement funds for the Ala Wai Canal flood mitigation project resulted when federal dollars became available.

State Rep. Sylvia Luke, House finance chairwoman, found that allotment the “most troubling” aspect, citing her understanding that this was to be a city project. Johnston said the state and city share jurisdiction here, but acknowledged there are still discussions ongoing over how the funding will shake out.

At the very least, there needs to be clarity about what changes to the canal the public can expect to see, and when.

>> There’s $35 million proposed for homelessness programs, including Housing First. Lawmakers should press the administration for details about the progress being made there, and whether any projects can be expected to move a greater number of the homeless off the streets.

So far, the administration’s “ohana zone” homelessness plans offer no new innovations.

>> Luke is right to be concerned about the proposed expansion of the Hawaii Promise program of tuition aid to enrollees in four-year campuses as well as community colleges. The public needs a reading on how effectively the existing program is helping needy students advance their education before more money should be committed.

She also is correct that state programs need careful scrutiny for their effectiveness, through performance-based budgeting reviews. The governor’s fiscal conservatism sounds the right note of caution at the outset.

But lawmakers also need to apply their pencils, well sharpened, to deliver the final product: a workable state budget.