Hawaii lawmakers will return to the state Capitol on Monday to get back to work, and their primary mission is to find ways to cope with a looming budget shortfall and prevent furloughs and pay cuts for public workers.
Lawmakers are anxious to head off any effort by Gov. David Ige to impose furloughs, and have been scouring the state budget for pockets of funding that can be used to offset the anticipated collapse in state tax revenues because of the coronavirus pandemic, sources said.
Gov. David Ige has said the state faces a $1.5 billion budget shortfall for this year and the fiscal year that begins July 1, and union leaders were told the state planned to impose furloughs equal to a 20% cut in pay on May 1. The administration later amended that plan, saying the furloughs would not be imposed before June 1.
When they return to the Capitol, lawmakers plan to authorize Ige to borrow money from the federal government to cover the cost of running state government, a temporary solution to the state budget crisis that was proposed by U.S. Sen. Brian Schatz last month. The money would need to be repaid later.
The Legislature also wants to authorize the administration to issue “pension bonds,” which are financial instruments that would allow state government to borrow the money it needs to pay the annual pension obligations for public workers.
The state contributes about $500 million a year to the Employees Retirement System to cover its pension obligations for state workers, and pension bonds would allow the state to borrow that money in the near term and repay it later.
Lawmakers also plan to tweak various appropriations for state construction spending to ensure that enough money has been earmarked for “shovel ready” projects that can be awarded and launched quickly.
Increasing government construction spending is a long-standing strategy for boosting the economy during economic downturns, but that money also needs to be repaid in the years ahead. State general obligation bonds are generally repaid over 20 years.
State officials are also hoping the federal government will relax the restrictions on funding that has been provided to the state through the CARES Act. States are required to use that money to cope with the coronavirus epidemic, and are not allowed to use those funds to cope with their public shortfalls.
Lawmakers closed the state Capitol indefinitely on March 19 after state Sen. Clarence Nishihara tested positive for the coronavirus, and House Speaker Scott Saiki announced on last week the Capitol would remain closed until May 31 to comply with Ige’s stay-home order.
It’s unclear how lawmakers’ new plans fit with that administration order, but the Ige administration has begun to reopen the state and restart the state economy as the number of new coronavirus infections has dropped significantly in recent weeks.
Given the requirements of social distancing, the Legislature probably won’t be able to hold public hearings on bills and accept testimony from the public as they normally do.
Leading Democrats have been consulting with the state Attorney General’s office to try to work out how the Legislature can resume operations while also complying with requirements in the state constitution for public hearings and votes.