Green Says Budget Has Room For Public Worker Pay Raises, Even With Tax Cuts
The governor is also budgeting $400 million in each of the next two years to settle claims from the Lahaina wildfire victims.
贬补飞补颈驶颈 can absorb the largest tax cut in state history and still afford raises for public workers in the upcoming union negotiations, Gov. Josh Green said Monday at his annual presentation of the administration’s proposed state budget.
Green unveiled his administration’s proposed $21 billion two-year general fund budget in a briefing for reporters, highlighting his plans for wildfire mitigation, the Lahaina recovery effort and his ambitious initiatives to combat homelessness.
Green acknowledged the $1 billion year-end cash surpluses his administration has been projecting may shrink to half that amount as the Legislature diverts money into its own initiatives, but said the state still has record-setting cash reserves.
“We are in a good place as a state,” Green said. “We have adequate resources to meet our priorities and needs.”
Green’s proposed two-year budget totals $41 billion when all sources of funding such as federal and special fund revenues are included. In addition the administration is planning $1.9 billion in construction projects that would be funded with borrowed money.
Green’s new budget was delivered to the Legislature eight months after it approved a huge income tax cut that will reduce state tax collections by more than $1 billion a year when it is fully phased in.
That tax cut has some lawmakers worrying the state may resort to deep budget cuts to balance the budget, but Green says that won’t be necessary under his plan.
His budget documents project total spending from the state general fund will decline over the next two years, which would be extraordinary given Honolulu’s and the unusual expenses the state must absorb, such as costs related to the Maui wildfire recovery.
The general fund financial plan presented by the administration for fiscal years 2026 and 2027 also shows surpluses of more than $1 billion.
But Green said he expects those numbers will change.
“There will be definitely priorities that will emerge from the Legislature which will tap into some of these dollars,” he said of the surplus. “We tend to want to carry over at least $500 million.”
Contract negotiations are underway with public worker unions including the 贬补飞补颈驶颈 Government Employees Association and the United Public Workers. That will be an additional expense that is not built into the proposed budget.
Green said the raises will likely amount to about 3.5% for the first year of the new contract, and slightly more in the second year. That would cost the state an extra $300 million over the two-year budget cycle, which he said would be affordable given the large projected budget surpluses.
The proposed budget does include more than $400 million the state would set aside in each of the next two years as its share of a $4 billion settlement fund to resolve claims related to the deadly Lahaina wildfire last year.
Maui County, Hawaiian Electric Co., Hawaiian Telcom and Kamehameha Schools have also agreed to contribute money to the fund to settle claims by fire victims.
The proposed budget also includes $50 million for each of the next two years for Green’s signature “kauhale” villages program to house homeless people. He said he expects to have 30 of the villages operating across the state by 2026.
Green said those villages will provide 1,500 to 1,800 units for the homeless — including some who need extensive health care and other services — and added he believes the kauhale villages have already reduced the numbers of severely ill people in neighborhoods like Chinatown.
He said the kauhale are expected to save the state $485 million over 10 years by reducing the demand for services by people who remain unsheltered. Green said the administration will present the details of that calculation to lawmakers during session next year.
The administration is also seeking $2.2 million to fund a new office of the fire marshal, which would become part of the state Department of Defense, and another $15 million for the Department of Transportation to finance fire breaks.
During the budget briefing Green said he intends to submit a separate bill to the Legislature next year that would authorize the administration to withdraw about $50 million a year in interest earnings from the state’s to finance state efforts to cope with climate change.
That so-called “rainy day” budget fund now has more than $1.5 billion to be held in reserve for the next budget crisis, and that pool of money earns interest.
Green has sought for the last several years to levy a new “green fee” on Hawaii visitors to help cope with the impacts of climate change and to protect natural resources in Hawaii, but that idea has died each year at the Legislature.
Green said Monday he expects lawmakers may ultimately decide to combine his proposal to siphon off some interest earnings from the budget reserve fund with an increase in the hotel room tax and increases in impact fees for visitors for attractions such as parks.
He said the state needs about $200 million year “to deal with shoreline erosion, beach loss, firebreaks and so on.”
