Congress’ $1.9 trillion stimulus package may provide some relief to state governments across the U.S.
But in Hawaii, state lawmakers are warning that some $1.6 billion in funds the state government is expected to get from that package may not be enough to shore up some of the major budget holes facing local leaders.
The state must still figure out a way to pay back more than $700 million worth of loans borrowed to keep unemployment payments flowing. And the Legislature is still scrambling to find funds that can save state programs facing proposed cuts under Gov. David Ige’s budget.
“There’s so many different, big buckets that we’re going to have to try to fill,” Senate Ways and Means Chairman Donovan Dela Cruz said Wednesday during a Civil Beat-sponsored update on the legislative session.
The federal relief package was among topics Dela Cruz, House Finance Chairwoman Sylvia Luke and Hawaii Chamber of Commerce CEO Sherry Menor-McNamara covered in a wide ranging forum as the Legislature reaches its midway point.
Dela Cruz and Luke are responsible for shepherding the state’s $7 billion operating budget each legislative session. The federal stimulus was expected to clear all the state’s budget woes, but the money committee chairs tempered that excitement Wednesday.
The $700 million unemployment insurance loan must be paid back in November, Luke said.
Businesses worried that they may be on the hook for helping the state pay back those loans, but Luke said Wednesday that the state should pick up the tab.
“We think it is the state’s responsibility,” Luke said. “We don’t want the unemployed population not to get paid.”
The governor has also stopped payments into the state’s retirement health fund. While that may save more than $300 million this year, it also increases the amount of deferred health care payments for future government retirees.
The $1.6 billion must also last the state through 2024, Luke said. So the money must be spread out over the next three years. Luke said a significant chunk will be deposited into the state’s rainy day fund, which lawmakers drained last year to help cover government expenses.
Luke also said most cuts and layoffs proposed in Ige’s budget should be saved. Those include some proposed cuts for HIV support programs like the state’s needle exchange program, as well as tuberculosis services and some language access services.
Top of mind for many has been cuts proposed for the Sex Abuse Treatment Center.
“How do you tell a sex assault victim ‘I’m sorry you have to come back Monday at eight,’” Luke said.
Asked if many of those cuts would be saved by the Legislature, Luke said: “Most likely than not, they will be restored.”
All those monetary commitments mean some tax increases are still on the table, Dela Cruz said.
On Tuesday, the Senate voted to raise taxes on joint-filers earning more than $400,000 a year. The higher tax rates would stay in place through 2027. The proposal now moves to the House.
Luke was noncommittal on whether or not that measure, Senate Bill 56, would ever get a hearing. But she did point to several tax measures that the House advanced including green fees on tourists.
But while tax proposals may still be advancing, some tax relief efforts have stalled.
Lawmakers on Tuesday deferred about a dozen bills, among them measures to extend tax credits for low income individuals and retroactively save others from tax payments on their UI.
Luke doesn’t expect additional guidance to come from the state or the feds by tomorrow, the next time the House and Senate convene to move bills.
“This seems very controlling because we never had a situation where the feds provide this type of restriction,” Luke said.