Gov. David Ige’s proposal to store $1 billion of an expected state budget surplus for future emergency use is floundering at the Legislature.
Hawaii lawmakers this week zeroed out the proposed $1 billion emergency savings account appropriation in a Senate bill introduced on behalf of Ige, and deferred an identical House companion bill.
Prospects for the two measures, Senate Bill 3074 and House Bill 2106, don’t look good but could still result in some money being deposited into the Emergency and Budget Reserve Fund commonly known as the state’s “rainy day” fund.
The Senate Committee on Ways and Means zeroed out the appropriation amount in SB 3074 Tuesday after holding a public hearing on the measure Feb. 2.
The only testimony given on the bill was an endorsement from the state Department of Budget and Finance along with concerns raised by the Tax Foundation of Hawaii.
Craig Hirai, the department’s director, said in written testimony the federal government may not be able to give the state money like it did over the past two years to address coronavirus impacts, and that restoring state financial reserves could provide the means to respond to potential future issues having to do with climate change, geopolitical disturbances or other circumstances.
“Recapitalizing the (emergency fund) will further enhance the state’s reserves for times of unforeseen economic downturns and natural disasters,” he said.
The Tax Foundation had a critical view of the bill.
“We question why so much is being squirreled away, and therefore doing nothing at the moment, as opposed to addressing the needs we now have and could not deal with previously such as deferred maintenance across the state, at the airports, and so on,” the organization said in written testimony. “We also wonder whether the federal government would take a dim view of idling so much money, because a substantial amount of recovery funds are being distributed to the state and are meant to be used for recovery.”
The Ways and Means Committee amended SB 3074 to include a blank appropriation sum, and advanced the measure in an 11-0 vote Tuesday.
On Wednesday, Rep.
Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu) cut short a public hearing on the
companion bill in the House Finance Committee, which she chairs, because the Senate bill advanced.
“We will not be taking action on this bill,” Luke said of HB 2106.
If a majority of Senate members pass SB 3074, it could be considered in the House.
One big-ticket spending proposal initiated and advanced by lawmakers this year would give $600 million to the Department of Hawaiian Home Lands to create more homesteads for more than 28,700 Native Hawaiian beneficiaries, many of whom have been on a waiting list for decades.
Ige shared his plan to replenish Hawaii’s rainy day fund in December as part of his state budget proposal, which he said would reverse $1 billion in cuts made to state operations over the past two years while also socking away $1 billion for future emergency needs.
At that time, Luke expressed concern, saying, “I’m very uncomfortable about putting $1 billion into the rainy day fund when we have so many needs that we need to take care of right now for the benefit of the public after two years of a pandemic.”
Other leaders in the Legislature had similar responses in January after Ige gave his State of the State speech in which he reiterated his goal to rebuild a “solid fiscal foundation” where the state could respond to a catastrophic emergency.
“For the first time in a long time, we have the resources to take care of both our immediate and long-term needs,” Ige said.
The Tax Foundation said appropriations to budget reserve funds should be made sparingly because there is no shortage of immediate needs, and that if lawmakers decide to deposit some amount of money into the rainy day fund then there should be a more data-driven analysis supporting it.
