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EditorialOn Politics

Richard Borreca: $1B Hawaii budget hole might avoid pay cuts for now, but won’t allow for much growth

                                The Hawaii State Capitol rotunda is seen on March 19 in Honolulu.
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The Hawaii State Capitol rotunda is seen on March 19 in Honolulu.

The good news is the Legislature’s 76 separate egos appear to be working with some agreement toward fashioning a new state budget.

The bad news is they are writing a bad new budget about how much money we don’t have to spend for schools, hospitals, poor people and any future expansion.

You are not going to like this plan unless you are the sort who, by reflex, says, “I’ll take less, give me a smaller plate.”

The tentative plan is to somehow get through the next two years without bouncing state checks.

Senate Ways and Means Committee Chairman Donovan Dela Cruz and House Finance Committee chairwoman Sylvia Luke are deficit veterans; they have seen bad times before, including projected budget deficits of $700 million.

In the days of Govs. Linda Lingle and Neil Abercrombie, the strategy was to grab everything not nailed down. Gone were hotel tax payments earmarked for the counties, deferred were Medicaid payments and tax refunds.

Switch to today and it is the same, except worse.

The state was supposed to collect 4% more during the next fiscal year. Instead, the State Council on Revenues, because of the COVID-19 depression, now predicts zero growth, meaning that the state will have about $225 million less in revenues than expected, according to calculations by the state Senate.

Budgets are not like checkbooks because they are based on assumptions of growth. The state budget also has carry-over balances. For instance, according to reports by the Honolulu Star-Advertiser, current legislative plans are to delete $71 million that was budgeted for the salaries of vacant state government positions. Also, legislators are putting some skin in the game and, for the first time, are not taking the pay raises that had been recommended by the Salary Commission.

The Senate announced it would approve legislation that “defers all salary increases slated for this fiscal year for members of the Legislature, the governor, lieutenant governor, justices and judges of all state courts, administrative director of the State or an equivalent position, and department heads or executive officers and the deputies or assistants to the department heads or executive officers of the departments.”

Meanwhile Luke and Dela Cruz are working on a plan that puts the deficit at $1 billion, instead of the $1.5 billion estimated by Gov. David Ige.

Luke said this is because Ige was calculating from the assumption that everything in his budget was approved and spent by the Legislature.

“Even he will agree that that is not reasonable but he continues to start with his submitted budget, which increases the starting point by $500 million. So basically there is a $1 billion shortfall,” Luke said in an interview.

So legislative leaders disagreed with Ige’s budget starting point, a 20% state worker pay cut. But, as lawmakers are assembling a more realistic budget, Ige is backing down from his 20% pay cut.

In a video address last week, he said his 20% cut “is the last thing that anyone wants to do, and I’m hopeful that we will find ways to narrow the budget gap.”

So far, it is clear the Legislature is calling the shots, with Ige left to implement a budget no one envisioned or wanted.

Richard Borreca writes on politics on Sundays. Reach him at 808onpolitics@gmail.com.

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