Gov. David Ige’s proposed budget for the next two years recommends sharp cuts to state programs in order to make up for a $1.4 billion shortfall over each of the next four years.
Ige’s 2021-2023 executive biennium budget, unveiled Monday, notes that, because of COVID-19’s extreme impact to state revenues over 2020, large multi-million-dollar budget cuts across the state government are essential to avoid further furloughs or layoffs of state employees.
Ige’s proposed operating budget would be $15.4 billion in fiscal year 2022, a decrease of $276.4 million — or 1.8% — from funds appropriated in fiscal year 2021. Fiscal year 2023 would have a total operating budget of $15.5 billion.
The state’s general fund also would decrease, with $7.6 billion requested for fiscal year 2022, a decrease by 4.5% from the previous year, and $7.7 billion requested for 2023.
The state’s capital improvements budget for the biennium also would include about $1.1 billion in general obligation bonds, a decrease by nearly $800 million from the previous biennium.
“Going forward, we continue to focus on a target of reducing the budget by $600 million every year, starting fiscal year 2022,” Ige said.
Among the cuts to the operating budget is a $600 million decrease to state health premium payments over the next two years, and a $19.2 million decrease in retirement benefits funding. However, Ige said the cuts to those benefits is because the state will simply no longer pre-fund those programs, and will instead use a “pay as you go” model used by every other state in the country.
Ige added that he might seek emergency appropriations to assist the state in distributing a COVID-19 vaccine and providing surge staffing for hospitals. While those appropriations were expected to cost $205 million for fiscal year 2021, he said that amount may decrease pending the results of a $900 billion coronavirus-relief measure that was passed Monday by the U.S. Congress.
That bill, which would include direct stimulus payments of $600 to most Americans, would include at least $1.7 billion for Hawaii — although U.S. Sen. Brian Schatz relayed via text message to the state’s House Select Committee on COVID-19 Monday that a “conservative” estimate would place the total closer to $2.5 billion.
Of that sum, at least $200 million would be allocated toward unemployment assistance in Hawaii that could cover salaries up to about $65,000 for three months. Another $200 million would go toward rent relief and extending the federal moratorium on evictions until the end of January, and another $200 million would go to Hawaii schools, the vast majority of which would go toward elementary and secondary school emergency relief funding.
Other provisions of the federal measure would include $150 million for COVID-19 testing and contact tracing in Hawaii, $5 million for Hawaii health care providers, $25 million in grants for Hawaii child care providers, $128 million for various Hawaii airport and highway projects, and $30 million to the Department of Hawaiian Home Lands for the expansion of broadband internet infrastructure.
The federal measure would also, if passed, grant states a deadline extension for using the remainder of funds from the previous federal aid package — the Coronavirus Aid, Relief and Economic Security Act — until Dec. 31, 2021. However, Ige said the state already has in place plans to spend the remaining CARES Act funds before the end of this year.
Depending on the passage of the federal measure, Ige said the injection of additional funds might allow the state to postpone state worker furloughs until July of next year, which could give the state additional time to tweak the budget.
However, Ige added that state layoffs are not out of the question: The budget will cut about 955 positions, and while the majority of those positions are currently defunded or will be converted to positions not funded through the state general fund, 149 of those positions are currently filled. Ige said state departments are working on consolidating positions in order to prevent the need for layoffs.
“Together, we can get through this,” Ige said. “We have the unique opportunity to reshape Hawaii for the future, to make it stronger and more resilient.”
Ige also added that residents should be mindful of their loved ones’ health during the holiday season, urging people to reconsider travel plans or holding large family gatherings.