HONOLULU (KHON2) — The state legislature is about to begin important budget negotiations, with the Senate unveiling its spending plan for the next two years. But with federal funding cuts looming, lawmakers are faced with tough choices.
The Senate’s proposed budget is based on cautious revenue projections and prepares for a recession that Ways and Means Chair Senator Donavan Dela Cruz says he’s anticipating.
The Senate’s budget proposes $19.9 billion for the fiscal year starting July 1 and $19.7 billion for the following year.
The largest item in the budget is committed to the Lahaina Settlement – about $807 million in the first year and $407 million in the second year.
To prepare for shortfalls due to federal funding cuts, the Senate is putting more than $260 million into construction.
“We know that construction is always something that has helped hold up Hawaii’s economy. So we’re putting quite a bit of money into construction, especially some general fund money,” Dela Cruz said.
The Senate’s budget proposal also directs millions into affordable housing, workforce development and economic development, as well as biosecurity.
The Senate says in order to stabilize the economy, they are investing in tourism and diversification, especially agriculture.
Dela Cruz said he’s been the Ways and Means chair through previous crisis such as COVID, the Kauai floods and the Kilauea eruption. He says there is always some type of incident that puts certain parts of the budget in flux.
“We just have to be calm, cool and strategic, and I don’t think we should be overreacting and then make a decision that’s going to be harmful,” he said.
To help save money, the Senate’s budget proposes eliminating state government jobs that have been vacant prior to 2020. Those jobs established after 2020 will not be cut.
“We were able to identify at least $50 million in savings if we were to cut those vacancies,” Dela Cruz said.
The Senate and House money committee members will now meet in conference over the next few weeks to work out their differences and agree on a final bill to be approved. But the question still remains: will federal funding cuts force future difficult decisions?