Simmering frustration between Gov. David Ige and the state Legislature approached the boiling point Thursday as lawmakers voted to move more than $1.3 billion into the state’s “rainy day” budget reserve fund — where lawmakers would control it — and the Senate authorized a committee to issue subpoenas to pry information loose from the administration.
Senate Bill 75 would deposit nearly $636 million in federal CARES Act money into the rainy day budget reserve fund, while Senate Bill 3139 would transfer $452 million in other state funds into the rainy day reserves. SB 3139 also would authorize the Ige administration to transfer another $258 million to the budget reserve fund.
Both bills won final approval Thursday from the Legislature in an abbreviated session called to address issues surrounding the COVID-19 pandemic, and the measures now go to Ige for his consideration.
Lawmakers also authorized Ige to borrow up to $2.1 billion from the federal government to cover state operating costs, and voted to distribute more than $175 million in CARES Act funding to Maui, Hawaii and Kauai counties.
The CARES Act was passed by the U.S. Congress and signed by President Trump in March to fund pandemic relief efforts.
Ige declined through a spokeswoman to say if he intends to veto any of the bills, but state Budget Director Craig Hirai has warned lawmakers that moving the CARES Act money to the rainy day fund could prevent the state from distributing the cash before the federal deadline at the end of the year.
For example, lawmakers are not permitted to appropriate more than 50% of the money in the rainy day fund in any one fiscal year, Hirai said. But any CARES Act money that the state fails to spend by Dec. 30 would have to be returned to the federal government.
Leading lawmakers have said they reconvened at the Capitol last week to identify funding Ige can use to balance the state budget so it won’t be necessary to impose public-worker pay cuts and furloughs next year.
Ige has said his administration must cope with a $1.5 billion budget shortfall over the next 15 months, while lawmakers contend the shortfall is only about $1 billion.
Last month the governor told leaders of the public-worker unions he intended to impose 20% pay cuts for state employees, including teachers, a plan that was immediately opposed by House Speaker Scott Saiki and Senate President Ron Kouchi.
Union leaders and others contend that cutting public workers’ pay would do more damage to the state economy and might prolong the economic downturn that has been triggered by the pandemic and the shutdown of Hawaii tourism.
Sens. Russell Ruderman and Laura Thielen on Thursday criticized the decision to deposit large sums in the rainy day fund at a time when many Hawaii residents cannot afford food or rent, with Ruderman telling his colleagues that “we need to be the government that helps the people.”
“My point is the crisis is now, and it’s urgent, and soon we’re going to have a lot more homeless, a lot more hungry, a lot more people in permanent need of expensive social services,” said Ruderman (D-Puna). “We should be putting aside our power struggles, our desire to stash and control money, and we should be helping our people as much as possible.”
But Senate Ways and Means Chairman Donovan Dela Cruz said lawmakers plan to return to the Capitol next month, and will have a better idea then of how large the budget shortfall might be, and how much additional federal support may be forthcoming.
While most of the state’s share of the CARES funding would be held in reserve in the rainy day fund until then, Dela Cruz said the counties will be using their share of the CARES funding to make grants to help with community social needs.
The state received $862 million in federal funding under the CARES Act, and lawmakers have appropriated $80 million of that for Hawaii County, $66.5 million for Maui County and $28.7 million for Kauai County. Honolulu already has received a separate allocation of federal funding from the CARES Act.
Dela Cruz told his colleagues that Chief State Economist Eugene Tian predicts it will take five years or more for the state’s tourism economy to recover, and “we need to think and act responsibly and prudently with the federal resources that are being provided us.”
“This legislative body (understands) the gravity of the situation and the impact on every resident of the state,” Dela Cruz said. “We owe the citizens of this state both immediate and long-term stability and security.”
Kouchi said moving the money to the rainy day fund “just assures that we’ll all be involved in the decision- making about where the needs are in the community and what the revenue impact is.”
The Senate also approved Senate Resolution 198, which authorizes a Senate Special Investigating Committee on COVID-19 that could issue subpoenas to obtain information from the administration. The Senate already has a Senate Special Committee on COVID-19 that has been holding hearings on the Ige administration response to the pandemic.
Kouchi said the concern was that some Ige administration officials were instructed “not to share the information with the committee, and so they want to ensure that doesn’t happen.”
House Speaker Scott Saiki said Thursday that he believes such a committee “actually might have a negative effect in that you may have administration officials not wanting to be specific or not wanting to provide certain kinds of information. … It’s really not constructive at all, and I really don’t believe that the Senate is going to obtain information that they otherwise wouldn’t have been able to obtain without an investigative committee.”