Gov. David Ige on Monday unveiled his proposed $13.7 billion state budget for next year along with a construction budget that would push $1.8 billion in new building projects out into the already busy Hawaii economy.

Ige’s new budget puts the state on a track to spend $488 million more from the general treasury next year than it will collect in taxes or other revenues, but state government had a large cash surplus of $828 million at the end of the last fiscal year that can be tapped to help cover the cost of his proposed spending plan.

Ige also announced a plan to accelerate payments on one of the state’s largest unfunded liabilities by setting aside $408 million next year to cover future health costs for retired public employees and their spouses. That would be in addition to $360 million the state has already budgeted to provide health insurance for public workers, their dependents and retirees next year.

Ige said his administration’s commitment to prepay that unfunded liability for health coverage will save the state more than $500 million over the next 20 years. “This is part of my work that is not glamorous or exciting,” he said. “It is, however, the only responsible act to take.”

The draft budget for the year beginning July 1 was submitted to the state Legislature on Monday, and Ige said he looks forward to a “healthy exchange of views on these and other issues” as lawmakers consider whether to adopt his proposals.

Some lawmakers including House Finance Chairwoman Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu) have worried that the state has in recent years been spending more than it collects in revenue. However, Luke said that is less of a concern with Ige’s new proposed budget because the governor intends to prepay the state’s existing health fund obligation to provide coverage to public workers, and also wants to build up the state’s cash reserves.

Ige has told lawmakers he will propose a measure to bank $100 million in the state’s “rainy day” budget reserve fund, but that bill won’t be submitted to the Legislature until next year, Luke said.

Senate Ways and Means Committee Chairwoman Jill Tokuda (D, Kailua-Kaneohe) said, “Obviously, that’s always a concern when you’ve got negative revenues over expenditures.”

She added, “That being said, we are going to take a good look at what he put forward and proposed, and see what we are able to do in terms of balancing out all of those ongoing obligations and those needs, and consider how we can sustain those going forward.”

Ige’s draft budget includes $350 million more than budgeted this year for Honolulu Harbor modernization, and $161 million more than this year’s amount to support affordable-housing projects.

Ige’s proposed budget also includes $179 million more than this year’s amount in improvements to the Honolulu and Kona airports.

“Specifically, I have been committed to open an international port of entry at Kona Airport, and this will help us in that regard,” he said.

Ige also announced he is proposing to add $248 million to this year’s figure to further support education, “which remains one of my highest priorities, and one on which I know a lot more needs to be done.” The budget also proposes to add $4 million than was funded in 2015 to support the University of Hawaii Cancer Center, which has a budget shortfall.

The budget proposes to invest in “the core infrastructure of government,” which will allow the state to move forward more efficiently, he said.

“This administration has been focused on ensuring the state’s fiscal stability, now and in the future,” Ige said. “We do know that these investments will help our position and reduce the cost of government on a going-forward basis, and while we are committed to be fiscally responsive, we also intend to be responsive to the needs of our community, and this budget truly reflects that.”

Ige’s new proposed budget also includes $160 million to build a new patient care unit to replace the forensic unit of the Hawaii State Hospital for the mentally ill in Kaneohe, and Luke predicted there will be questions about that request from the Legislature. The forensic unit houses mentally ill patients who have been accused of crimes.

The Department of Health has told lawmakers it will take seven or eight years to build a new hospital facility, and Tokuda said she wants that timetable shortened to perhaps three years. Luke called that Health Department timetable “ridiculous” and said that if construction is still years away, that suggests the department doesn’t need all of the money immediately.

“If it’s still going to take seven to eight years, what’s the sense of tying up $160 million right now for a project that’s not even going to be done for eight years?” she said. If the department needs time to obtain permits or other approvals, it should do that and come back for the money when it’s time to pay the bills, she said.

Budget-in-Brief-FY-17-BIB.pdf by Honolulu Star-Advertiser

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