Hawaii Gov. David Ige has asked the Legislature to increase spending by 10.2% in the state’s operating budget for 2023, the second year of its 2021-23 biennium budget.
Hawaii has a biennium budget process in which it approves a two-year budget, and then passes a supplemental budget in the second year making necessary changes.
The Legislature approved last year $16 billion in spending in its operating budget for fiscal year 2022 and $15.4 billion for 2023. Ige has asked that the operating budget for 2023 be increased to $16.9 billion, a 10.2% increase from what was already approved.
Ige is also requesting a 12.2% increase in the state’s general fund budget, which would increase it by $942.3 million to $8.7 billion.
“This budget request is very different from budget requests of the previous two years, when we had to cut more than $1 billion, and all state agencies were forced to slash spending,” Ige said during a press conference Christmas week. “This year the economy has improved more quickly than anticipated.”
Ige’s changes would restore programs and hire employees to replace those who were laid off in 2020 as tourism plunged. He would also replenish the state’s rainy day fund depleted to cover unemployment costs.
In his budget, Ige noted, unemployment in Hawaii soared to 21.9% from 2.1% at the height of the pandemic in mid-2020.
The state was also forced to borrow $800 million from the federal government after it depleted its Unemployment Insurance Trust Fund, but has since paid that back using funding from the Coronavirus Aid, Relief, and Economic Security Act, according to Ige’s budget document.
“By October 2020, we developed and implemented the state’s safe travels program, which allows most air travelers to bypass the state’s mandatory 10-day self-quarantine with a valid negative COVID-19 test result or by being fully vaccinated,” Ige wrote in the budget document. “This helped revitalize our tourism industry as more than 9.3 million travelers have come to Hawaii since then.”
Hawaii had two ratings
In his request, Ige noted both the Department of Education — K-12 is solely funded at the state level in Hawaii different from nearly every other state where education is funded locally — and the University of Hawaii, suffered steep cuts at the onset of the pandemic, and his budget request would restore that funding.
“Last year, we were planning for furloughs,” Ige said. “Today, we are restoring and investing more than $689 million for public education.”
The Legislature authorized general fund to general obligation bond swaps in 2020, special fund transfers of $345 million transfer from the Emergency and Budget Reserve Fund, which increased the fiscal year 2020 balance of the general fund by $648 million. As a result of this and spending restrictions, the FY2020 general fund balance grew to $1 billion.
The boost in revenues as tourism returned, however, enabled the state to end fiscal year 2021 with a general fund balance of $1.25 billion after seeing general fund tax revenue grow 27.3% in the final five months of the year, according to the governor’s budget document.
Ige will propose depositing $1 billion the EBRF, the state’s rainy day fund, in separate legislation.
“As we have seen in the recent past, these are turbulent times, and we must be prepared to weather the worst on our own, because the federal government may not be able to assist in the future,” Ige wrote in his budget document.
Ige plans to submit bills for fiscal year 2022, which total over $28.4 million, $1.4 million in general funds and $27 million in general obligation bond funds for Department of Education projects.
He is also canceling $33.3 million in American Rescue Plan-funded projects that do not meet federal guidance, in favor of $115.3 million in statewide broadband projects that meet federal guidelines.
The budget proposal restores $17.6 million to fund roughly 300 positions in the Department of Public Safety, restoring the department to 2019 levels. His budget would also add 193 positions, including 29 healthcare positions to the staff new wings and address overcrowding problems on Hawaii and Maui at the Women’s Correction Center.
