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The state budget holds immense importance, acting as a blueprint for how our state allocates resources and reflects its priorities. This financial plan determines funding for crucial services like education, health care, infrastructure and public safety, directly impacting the lives of Hawaii’s residents.

In our personal lives, budgeting can be an anxiety-inducing chore that forces us to face our financial realities and the accompanying restrictions.

Dealing with the state budget often feels the same. Lawmakers may start the session with lofty ideas and promises for new programs and policies. Still, those proposals won’t be realized until the Legislature’s money committees connect them to a funded line item in the state budget.

And that’s why I love the state budget. Seriously. It’s my favorite piece of legislation.

Crafting Hawaii’s budget is an all-hands-on-deck activity. It involves multiple branches of government, input from advocates and lengthy debates over how to spend our limited resources on many equally deserving causes. And the final product touches the lives of every person who visits or resides here. It’s the most complex, collaborative, and crucial bill the legislature passes each year.

So, what goes into passing this monster legislation each year?

It starts with the Council on Revenues, which estimates how much the state will receive. The council’s inform the governor’s initial proposal, which the Department of Budget and Finance develops with input from each executive department.

This proposal, reflecting the executive branch’s priorities, then faces scrutiny by the Legislature.  After the House Committee on Finance makes its changes to better match its priorities, the bill passes to the Senate Ways and Means Committee to do the same.

These committees hold hearings, gather information and negotiate a final product in the final weeks of the session. Most bills with a financial impact will be stalled until the committees can reach an agreement during the Legislature’s conference period, which is a big part of the reason so many bills die in the waning days of the session.

Ultimately, the Legislature votes on the revised budget, determining how much the executive branch can spend on each department, program and initiative.

The budget process is always complicated, but legislators are facing significant challenges this year as they begin amending the in the coming week.  

To start, the $3.9 billion general fund surplus that outgoing Gov. David Ige projected failed to materialize due to increased spending commitments and a decline in tax revenues. While the state will still enjoy an estimated surplus of over $600 million in June, the drastic decrease will force legislators to scale back spending plans.

Hawaii is not alone in this challenge. States across the country are grappling with fluctuating revenues and looming shortfalls. , for instance, slowing revenues have led to a staggering budget hole, with estimates from the Legislative Analyst’s Office pegging it at a daunting $73 billion.

While Democratic Gov. Gavin Newsom offers a more optimistic perspective, stating it’s about half that size, the underlying concern is significant. Like Hawaii, California enjoyed unexpected economic growth and federal aid following the initial impact of the coronavirus pandemic. As both revenue sources dwindle, states need to prioritize.

Each state faces its unique tradeoffs as it weighs which of its communities needs to be put first. In Hawaii, the sheer scale of the destruction from Maui’s devastating fires is top of mind for legislators. The complexities of rebuilding infrastructure, providing emergency assistance and accessing federal funds lead to spiraling costs. Recently, the Senate Ways and Means Committee made it clear that there are limits to how much funding the state can commit to the recovery.

Besides the immediate needs of Maui’s families, lawmakers are looking to stretch funds to tackle the state’s affordable housing and mental health crises along with improving fire mitigation, increasing school resources and reducing taxes for lower-income earners. In addition to improving our aging infrastructure and moving us closer to our climate goals, these priorities are critical needs that legislators can’t hope to meet with this year’s resources. And the act of choosing some over others should be painful.

I don’t think we admit that enough. As a politician, it’s easy to set a vision and offer improvements when pitching yourself to the public.  As voters, that optimism is what we reward.

But we should reward the politicians telling us they will work hard to meet Hawaii’s residents’ current and future needs, but it can’t be done all at once. There will be no easy fixes to our problems, and many sacrifices before we can get to a better place.

That’s why I love state budgeting. It forces the truth. It makes us put our priorities on paper. And, if Hawaii residents from all walks of life weigh in, it’s an opportunity to collaboratively express our communities’ values, prioritize our needs and choose which sacrifices we can afford to make.

Looking ahead, our state can improve the budgeting process by embracing practices that foster long-term fiscal sustainability. In , Pew Charitable Trusts found that states that used long-term budget assessments and budget stress tests to regularly measure risks and anticipate shortfalls could better respond to crises, weather economic instability and plan for the future.

Twenty-eight states use one or both of these tools, but Hawaii has yet to adopt either. An easy first step would be to incorporate a deeper analysis of our revenue and spending projections, including notable patterns and causes of surpluses and deficits.  

Next, the state could use budget stress tests to evaluate how the budget would fare in various economic scenarios, such as a recession or another pandemic.

Those tools may only increase the complexity of an already difficult exercise. Yet, Hawaii’s 2024 budget is not just a collection of numbers. It reflects the state’s values, priorities and commitment to serving its residents. The more information we have, the better we can adhere to a long-term vision and ensure that the needs that go unmet now will be addressed in the future.