It Looked Bad In The Beginning, But Maui Did Not Suck Up All The Money In The State Budget
Thanks to a large starting surplus of cash and a surge in support from the federal government, the state is managing the huge costs of the Maui fire — for now.
Thanks to a large starting surplus of cash and a surge in support from the federal government, the state is managing the huge costs of the Maui fire — for now.
In the end, fears that the Maui wildfire disaster could trigger a budget crisis so severe that it might cripple state government proved to be wrong.
Certainly not everyone will get all they wanted from the Legislature this year, but the new budget document approved by lawmakers on Tuesday shows the state still has some cash on hand to try to address longstanding problems such as invasive species, affordable housing and public education.
In fact, the proposed new budget earmarks a hefty $4.5 billion for construction projects next year, including $1.3 billion in federal funds for highways, airports, school construction and other projects.
Gov. Josh Green said in a written statement Wednesday that “our state’s financial picture has remained solid in spite of the tragic wildfires and the lingering effects and costs of the pandemic, so we are able to continue to take on Hawaii’s greatest challenges like housing and homelessness, while continuing to provide access to core services, without tapping into emergency reserves.”
Senate Ways and Means Chairman Donovan Dela Cruz offered a similar upbeat sentiment in a press release, saying lawmakers working with the administration produced a new budget “that is proactive in developing a diversified economy and stabilizes core services and programs to address the needs of our most vulnerable residents.”
Those cheery remarks are a happy turnabout from an alarming budget bulletin Dela Cruz issued in February calling on state departments to prepare for major potential budget cuts of 10% to 15%. Dela Cruz cited escalations in the cost of the response to the Maui fire as the cause of the budget troubles.
Not everyone agreed. House Finance Committee Chair Kyle Yamashita told reporters just a few weeks later that the state had enough money to cope, and would not even need to tap into its $1.5 billion “rainy day fund” to balance the budget. “So, we will be fine,” he said.
It helped that the state ended the last fiscal year on June 30, 2023, with an enormous budget surplus of more than $2.17 billion, which softened the fiscal shock from the disaster. The administration projected last fall that surplus would shrink to just $607 million by next June 30 as the state absorbs the cost of the Lahaina recovery
Kalbert Young, a University of Hawaii vice president and its chief financial officer, said he had not finished his analysis of the new budget bill, and the detailed worksheets that accompany it are not yet available for public review.
But the “UH budget appropriations generally looks decent compared to years past. Not ideal compared to what was requested by the Board of Regents or the governor, but I assume reasonable given broader state-level issues,” Young said.
He added, “I just hope that what funding was provided to UH is still meaningful enough to advance the evolution of the university.”
Directors of several state agencies Wednesday said they were still looking over the budget and could not comment because things could change before a final floor vote on , the budget document.
Nonprofit agencies and community organizations were warned early in the session there might not be any money available for state grants to fund their operations or construction projects because of the cost of Maui recovery efforts.
In fact, the budget released this week included $30 million in grants for nonprofits and community groups, although that’s significantly less than the $50 million lawmakers handed out to nonprofits last year.
The Hawaiian Humane Society, a nonprofit that promotes the humane treatment of all animals and also serves as a refuge, was pleased with what it received in the budget.
It included a grant-in-aid request of $400,000 to help strengthen its facilities in Moiliili and Ewa Beach by installing screens and sheeting.
“We’re absolutely thrilled that the Legislature funded our request,” said Stephanie Kendrick, director of Community Engagement. “I think the tragedies on Maui made us all a lot more conscious about disaster preparation, which is something that’s easy to bring to mind during hurricane season and the like but falls off the priority list with all of the other things that we have to do every day. And the tragedy of the Maui wildfires really forced everyone to say, ’Hey, this absolutely has to be a priority.’”
The Humane Society also applied for operating grants totaling $50,000. It got $45,000, money it will use to provide spay neuter resources to the smaller groups that are members of the Oahu Animal Welfare Alliance.
Another sign that the state is not quite in dire financial straits can be found in the construction budget. Lawmakers plan to pay cash for more than $140 million of the state construction projects included in the budget, including work on schools, hospitals and other facilities.
That is notable because the state traditionally finances construction with borrowed money, and saves its cash to pay for government operations. Using such a large lump of cash for construction projects implies the state has some money to spare.
The budget document itself does not include most of the state funding needed for the near term response to the Lahaina wildfire that killed at least 101 people and destroyed many homes and businesses.
Funding for the Lahaina recovery effort is contained in and , which lawmakers plan to consider on Thursday. Those bills together appropriate more than $844 million to respond to the fire, money that is being handled separately from the main budget.
Green said in his statement the new budget “appears to fund our people’s main priorities, and we hope and expect that pending bills will provide sufficient support for Maui’s recovery and tax relief for families in Hawaii who are struggling the most.”
The main budget bill now advances to the full House and Senate for further debate and final floor votes. The Legislature is scheduled to adjourn on May 3.
Politics Editor Chad Blair contributed to this article.
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Kevin Dayton is a reporter for Civil Beat. You can reach him by email at kdayton@civilbeat.org.