House Finance Committee Approves State Budget – with Amendments

News Release from House Democratic Caucus, March 18, 2021

Honolulu, Hawaiʻi – On March 17, 2021, the House Finance Committee amended and passed HB 200, the state operating budget for fiscal years 2021-2022 and 2022-2023.

At the start of the legislative session, the State projected a deficit of almost $2 billion. Governor David Ige proposed employee furloughs and presented the Legislature a budget that cut critical safety net services. He had also borrowed $750 million to pay for operating expenses for the first time in Hawaiʻi's history.

The $1.6 billion in federal funds allocated to the State in the American Rescue Plan Act (ARPA) provides a temporary reprieve for the State's financial crisis. The budget approved by the House Finance Committee appropriates $31.36 billion for two fiscal years. This budget appropriates the $1.6 billion in ARPA funds and $15.17 billion in general funds, $311 million less than was presented in the Governor's budget.

Highlights of the House Budget include:

• ARPA and other federal programs are providing additional funding for COVID public health infrastructure (testing, contact tracing, and vaccinations). Thus, additional appropriations are not needed in this budget.

• More than $740 million in ARPA funds are being allocated to repay the unemployment insurance (UI) loan principal and interest. While Act 1, SLH 2021 was fast tracked to prevent employers from facing dramatic UI rate increases, resolving and repaying this loan debt will provide necessary long-term solvency for the UI trust fund.

• Restores funding for critical safety net services such as sex abuse treatment, HIV prevention, and perinatal services.

• Government streamlining was addressed through the consolidation of the Land Use Commission, Land Survey Division, and Office of Environmental Quality Control with the Office of Planning to create the Office of Planning and Sustainable development and transfer of PISCES to UH.

• The budget was balanced without adding additional tax burdens to Hawaii residents.

House Bill 200, House Draft 1 now moves to the full House for a vote on third reading

HB200: Text, Status

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$1.6B Federal Aid will repay COVID Borrowing and more

CB: … The breathtaking scope of the federal bailout of state government was on display Wednesday as House Finance Committee Chair Sylvia Luke announced the state now has enough money to repay a $700 million unemployment insurance loan on behalf of Hawaii’s employers.

Luke also said in an interview she budgeted enough cash to repay another $750 million that Gov. David Ige borrowed last year to help cover state payroll and other operating costs, and said she expects to have some money left over to tuck away in the state’s “rainy day” budget reserve fund.

Luke presented the House draft of the state budget for the next two years at a Finance Committee hearing Wednesday afternoon.

In another surprise, Luke said in an interview the state will be able to make its scheduled payments for the next two years into the Hawaii Employer-Union Health Benefits Trust fund to cover future health care costs of state employees and retirees.

Ige had planned to defer those EUTF health benefit payments for five years to save about $1.85 billion, but Luke said Wednesday that won’t be necessary now….

Ige has said the state does not have enough money to repay that unemployment debt, but that was before Congress passed the American Rescue Plan. The new federal law provides $1.6 billion to shore up the state’s finances, prompting Luke to make plans to repay the unemployment debt.

Luke also said the proposed House budget would reverse the most alarming cuts that Ige had planned for some social service agencies, and will restore almost all of the planned cuts to the state Department of Education and the University of Hawaii system.

In fact, she noted that the federal bailout routed substantial sums directly to the DOE and the UH, which means their budgets should be made whole or more, she said. The DOE alone will receive $391 million in federal aid, she said….

read … House Spending Plan Fills State Budget Holes — And Then Some