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Hawaii lawmakers return to Capitol to fix $1.5B budget shortfall to avoid furloughing state workers

  • CINDY ELLEN RUSSELL / CRUSSELL@STARADVERTISER.COM
                                House Speaker Scott K. Saiki listened Monday during the opening of the Legislature.

    CINDY ELLEN RUSSELL / CRUSSELL@STARADVERTISER.COM

    House Speaker Scott K. Saiki listened Monday during the opening of the Legislature.

  • CINDY ELLEN RUSSELL / CRUSSELL@STARADVERTISER.COM
                                Hawaii lawmakers were seated in the public gallery Monday to maintain social distancing in the House of Representatives chamber while in session on the opening day of the Legislature. The state Capitol was closed to the media and public.

    CINDY ELLEN RUSSELL / CRUSSELL@STARADVERTISER.COM

    Hawaii lawmakers were seated in the public gallery Monday to maintain social distancing in the House of Representatives chamber while in session on the opening day of the Legislature. The state Capitol was closed to the media and public.

  • CINDY ELLEN RUSSELL / CRUSSELL@STARADVERTISER.COM
                                Flowers were placed at the front of the state Capitol on Monday, the opening day of the Legislature.

    CINDY ELLEN RUSSELL / CRUSSELL@STARADVERTISER.COM

    Flowers were placed at the front of the state Capitol on Monday, the opening day of the Legislature.

Masked state lawmakers gathered at the Capitol on Monday, returning to work in floor sessions where they sat 6 feet away from one another in a striking display of caution that illustrates how much has changed with the rapid spread of COVID-19 across the state and the country.

Only lawmakers, their staffs and deputy sheriffs for security were allowed in the Capitol building, with committee hearings and floor sessions streamed online for public viewing. Written testimony was accepted for the five bills the Legislature plans to pass in the week ahead, but the public was literally locked out.

“This pandemic has shown us that government is key to reopening Hawaii and protecting our safety net,” said House Speaker Scott Saiki in opening remarks. “In the next two weeks, we will stabilize our state budget to avoid drastic cuts and disruption in basic government services.”

Photo Gallery: Hawaii legislators back in session

“We will continue our work on a statewide framework to gradually reopen Hawaii in a coordinated manner while keeping people healthy and safe,” Saiki continued. “And we will work with the governor to design this quickly and to ensure that the entire state understands our plan.”

Lawmakers last week announced they were returning to the Capitol to pass a new budget bill to demonstrate that Gov. David Ige does not need to resort to public-worker pay cuts or furloughs to balance the state budget.

Despite the collapse in state tax collections as the local economy shut down during the pandemic, lawmakers pledged to cobble together a new budget package based in part on $215 million in savings from vacant state positions and spending restrictions imposed by Ige.

The Legislature also intends to substitute borrowed money for cash appropriations it made last year for the Rental Housing Revolving Fund and for a project at Aloha Stadium, which would free up another $270 million to help fund state operations.

That, combined with $25 million taken from a special fund dedicated to mental health and substance abuse and another $395 million in the state’s “rainy day” budget reserve fund, will be enough to cover state expenses for the year that begins July 1, lawmakers said.

Ige says the state faces a $1.5 billion shortfall in the next 15 months, and told leaders from the state public worker unions that he planned to impose 20% pay cuts or furloughs to cover the budget hole. Lawmakers say the Ige administration miscalculated and that the shortfall is actually $1 billion.

Ige acknowledged Monday there was a “clerical error” in some of the administration’s early projections but said it did not change the budget shortfall in the next 15 months. “We still believe the shortfall is $1.5 billion,” he said. In any event, “whether its $1 billion or $1.5 billion, it’s a significant reduction to the spending,” he said.

Ige urged lawmakers to refrain from cutting the budget, saying they should leave it to him to restrict spending as needed. That will allow the administration more flexibility, he said.

Ige and lawmakers are also divided over exactly what to do with $1.25 billion in federal funding provided for COVID-19 relief under the federal CARES Act.

Lawmakers plan to move more than $550 million of that money to the emergency and “rainy day” budget reserve fund, but Ige wants to use CARES Act money to replenish the Unemployment Insurance Trust Fund. That fund is being rapidly drained by an unprecedented 225,000 unemployment claims that have been filed since the COVID crisis began.

“As you know, we are depleting that fund, and if the full cost of that program needs to be borne by businesses, every single business in the islands would see an increase in their unemployment insurance costs, and so we’re looking at using CARES Act funds to really offset the unemployment insurance costs for all businesses all across the state,” Ige said Monday.

In all, the CARES Act allocated $862 million to the state and $387 million to the city. Lawmakers are earmarking some of that money the state received for the neighbor island counties, including $80 million for Hawaii County, $66.5 million for Maui County and $28.7 million for Kauai. Ige said Monday he agrees with that part of their plan.

The bill also would set aside $100 million for the Hawaii Emergency Management Agency to respond to the COVID-19 crisis and to respond in the event of a new surge in cases, and $20 million for the state Department of Transportation for thermal screening of passengers at airports.

Ige said he is asking that the transportation bill be amended to allow that money to be spent on “all travel-related security enhancement,” including enhancement of coronavirus testing.

Another $10 million is being earmarked for the governor’s office for the “economic recovery and resiliency navigator program,” which is supposed to chart a path forward for the state economy.

In the week ahead, lawmakers also plan to pass amended versions of House Bill 1631 and Senate Bill 75 to authorize Ige to borrow and spend up to $2.1 billion in federal Municipal Liquidity Facility funds if necessary.

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