Rosier state budget picture projected by Gov. Green
Gov. Josh Green reassured the public and Hawaii’s Legislature on Wednesday that Maui wildfire response and recovery expenses shouldn’t overwhelm state finances. Gov. Josh Green has assured the public and Hawaii's Legislature that Maui wildfire response and recovery expenses shouldn't overwhelm state finances. Green expects the state's actual fire costs to be $220 million less than a recent worst-case projection for the current fiscal year ending June 30. He also announced that he would remove a $300 million extra deposit into the state and county employee retirement benefits fund from the state general fund to be used for other budget needs. This move comes after a decision by the Senate Ways and Means Committee to amend the pending state budget bill making appropriation adjustments for the next and future fiscal years. The draft of HB 1800 includes $10.3 billion in state general funds for state operations in the next fiscal year, up 14% from the previous year.
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Gov. Josh Green reassured the public and Hawaii’s Legislature on Wednesday that Maui wildfire response and recovery expenses shouldn’t overwhelm state finances. Read more
Gov. Josh Green reassured the public and Hawaii’s Legislature on Wednesday that Maui wildfire response and recovery expenses shouldn’t overwhelm state finances.
Green said during a presentation livestreamed on his personal Facebook page that he expects the state’s actual fire costs to be $220 million less than a recent worst-case projection by his administration for the current fiscal year ending June 30.
The governor also said that he will nix a scheduled $300 million extra deposit into the state and county employee retirement benefits fund, so that this reserved cash in the state general fund can be used for other budget needs.
“We have a stable financial outlook,” he said. “We’re OK. … We are not in a place where we have to make cuts.”
The expected $520 million positive swing, according to Green, will help ensure that there will be no need to reduce essential services, cut jobs or dip into the state’s $1.5 billion “rainy day” Emergency Budget and Reserve Fund.
Green’s presentation followed a decision earlier Wednesday by the Senate Ways and Means Committee amending the pending state budget bill making appropriation adjustments for the current fiscal year and next fiscal year.
State Sen. Donovan Dela Cruz, Ways and Means chair, said during Wednesday’s hearing on House Bill 1800 that adjusting the budget from the version passed last year was a daunting task given Maui wildfire response and recovery obligations.
“Without a clear and articulated plan from the administration, this body has worked diligently with various stakeholders to align the state’s position to support the wildfire survivors and the future development of West Maui,” Dela Cruz (D, Mililani-Wahiawa-Whitmore Village) said during the hearing.
The current draft of HB 1800 includes $10.3 billion in state general fund appropriations for state operations in the next fiscal year that begins July 1, or about half of the $20 billion total that also includes federal funds, bond financing and other revenue sources.
Earlier this month, the state House of Representatives passed its draft of the bill, and proposed appropriating $11.3 billion in general fund revenue for next fiscal year, up 14% from a $9.9 billion budget for the same period passed last year by the Legislature.
The House draft included $1 billion for potential Maui wildfire recovery expenses, or a little more than 10% of the total general fund budget.
This $1 billion includes $135 million for the state’s share of federal assistance, $77 million for expenses not eligible for federal funding, $65 million for a victims relief fund, $123 million for housing costs, $500 million for other “non-congregate” sheltering and $151 million in subsidies to Maui County.
Some of these expenses, including the $65 million victims fund appropriation and $297 million for non-congregate sheltering, have been requested by Green to be part of emergency appropriations for the current fiscal year after the governor swept together about $200 million in unspent funds in December to help cover wildfire expenses this fiscal year.
On Wednesday, the governor said he expects wildfire expenses for the state to be $220 million less than previously presented as a potential maximum.
The biggest piece of this reduction is $107 million, which represents 10% of an estimated $1 billion cost to remove debris from the Aug. 8 fire that destroyed most of Lahaina and killed at least 101 people. The federal government will cover 100% of the cost during a six-month window of work and then 90% outside the window selected by the state.
Green said he believes the state may avoid any cost for debris removal in the current fiscal year and perhaps even further out.
Another $73 million in expected avoided costs are from recent Federal Emergency Management Agency decisions to deviate from past policy and cover $43 million for assisting condominium owners who lost property, and $30 million in aid to fire survivors who are citizens of the Marshall Islands, Micronesia and Palau under the U.S. Compacts of Free Association.
The last part of the savings, $40 million, represents a Hawaii Community Foundation contribution to a $115 million state project to build 450 temporary homes in West Maui for fire survivors.
On the other side of the state’s balance sheet, $300 million in unused revenue will become available for other uses because Green intends to not put the money into the Employees’ Retirement System fund as previously intended by the Legislature as an extra deposit on top of regular annual injections.
This appropriation was made in 2022 for deposit last year, but the deposit was deferred to this year to avoid violating a condition of spending federal coronavirus recovery aid. Now Green said he will let the appropriation lapse, freeing it up for other use.
Green also noted that some appropriations for other things might not get spent as expected because so much time and effort has been focused on helping Maui recover. Any appropriations that lapse revert to the general fund, which had a $1.3 billion surplus, or carryover budget balance, around the end of last year.
The governor on Wednesday projected that this surplus could drop to between $681 million and $981 million by June 30, and then to between $350 million and $650 million next fiscal year.
The state budget bill is to be considered next by the 25-member Senate, and then a compromise draft between House and Senate negotiators is expected to result in a final draft sent to the governor in early May for approval and possible line-item vetoes.
Cash kept in lieu of retirement system deposit