The state House Finance Committee on Friday took a cautious approach to the state’s two-year budget, shaving Gov. Neil Abercrombie’s spending request but agreeing with the governor that the state must take meaningful steps to address unfunded liability in the public-worker health care fund.
The budget draft, which will go before the full House next week for approval, is a temporary marker. Lawmakers will not hear the latest state revenue forecast until next week and do not know the full impact of federal budget cuts from sequestration. Contract negotiations between the state and public-sector labor unions are in progress, so lawmakers would have to fit any agreement reached before session ends in May into the spending plan.
"They are trying to address many of the needs out there," Rep. Sylvia Luke, chairwoman of the House Finance Committee, said of the Abercrombie administration’s request, "but at the same time, we have to balance the competing interests and competing needs, and there are a lot of uncertain issues and questions out there."
The committee chose to shave Abercrombie’s spending request in each of the next two fiscal years, a roughly $600 million difference that could free up money for the House’s own legislative priorities. The House would spend $11.5 billion in fiscal year 2014, down from Abercrombie’s proposed $11.7 billion. In fiscal year 2015 the House would spend $11.6 billion, down from Abercrombie’s $12 billion.
But the committee endorsed the Abercrombie administration’s request to devote a significant amount of cash — $100 million in fiscal year 2014, $105 million in fiscal year 2015 — to address the $16.3 billion unfunded liability in the state Employer-Union Health Benefits Trust Fund.
The down payment, which would follow adjustments two years ago by lawmakers and the governor to contain liability in the Employees’ Retirement System, could help assure credit-rating agencies that the state is serious about chipping away at potentially crippling debt. Privately, however, some doubt that lawmakers will set aside that much cash for a future liability when there are immediate demands for spending on education, social services and tax incentives.
"When we went through the budget and when we analyzed the priorities, that was one of the priorities for the House," Luke (D, Punchbowl-Pauoa-Nuuanu) said of addressing the health care liability. "And the members felt strongly, otherwise I would have heard about it."
Kalbert Young, the state’s budget director, acknowledged that it is a lot of money to set aside.
"We’re actually very grateful to the House that they continue to see the improvement possibilities for the state," he said. "So I think it shows that we’re still working collaboratively to address that issue."
The House budget draft includes $12.9 million in additional money for the weighted student formula, which bases public school spending on student need rather than school enrollment. Lawmakers pledged money for a new assessment test in Hawaiian for students at Hawaiian immersion schools and for new books — including e-books — at state libraries that were often overlooked during the recession.
Lawmakers would restore money for inspectors to better monitor for invasive species, ensure food safety and protect water quality. They also added money to perfect the state’s tsunami warning sirens.
Lawmakers removed money for more than 930 state positions — $55 million — that have been vacant for more than a year. Luke explained the positions were not eliminated to save money, but to encourage a more "honest accounting," since she said some state departments have used the money for vacation payouts.
The budget draft does not contain as much money as the Abercrombie administration wanted for information technology upgrades, but does include cash and bond money to help modernize the state’s tax processing system.
Luke, who became the committee’s chairwoman when House Speaker Joseph Souki’s coalition of dissident Democrats and Republicans took power this session, used the draft to outline some of the House’s policy choices.
Luke said the House would not pursue a fee on single-use plastic bags or an increase in the conveyance tax on luxury real estate deals to help finance watershed protection, as the Abercrombie adminstration has suggested. She said lawmakers would look at cash or bond money for watershed programs.
The draft also does not have money for Abercrombie’s state-funded preschool initiative, since the House did not advance any early-learning legislation, opting instead to consider the bills that crossed over from the Senate.
Luke said lawmakers left some room for tax options — such as expanding film production tax credits or income tax relief — but she said the fate of those bills will depend on the state’s revenue projections.
The House Finance Committee also advanced a draft state construction budget. The House would spend $1.7 billion in fiscal year 2014, about the same as the governor requested, and $912.8 million in fiscal year 2015, slightly more than the governor, for bond, federal and special-fund-financed construction projects.
The capital improvement project budget includes money for a new Kihei High School on Maui, a new Nanakuli Public Library and a new facility for the High Technology Development Corp.
Lawmakers declined requests from the state Judiciary for money for a new courthouse in Kona and a district court facility in Wahiawa.
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HOUSE BUDGET DRAFT
The state House Finance Committee on Friday approved a draft of the state’s two-year budget, which would allocate less than what Gov. Neil Abercrombie requested. Some highlights:
>> $100 million in fiscal year 2014 and $105 million in fiscal year 2015 to address the unfunded liability in the public-worker health care fund.
>> $12.9 million extra for a public-school spending formula that is based on student need rather than school enrollment.
>> $1 million for a common core assessment test in Hawaiian to serve students in Hawaiian immersion schools.
>> $1.1 million for state libraries to purchase additional books, including e-books.
>> Restores inspectors to monitor for invasive species, food safety and water quality.
>> Removes money for vacant state positions open for more than a year.
Source: State House of Representatives
