The state Senate Ways and Means Committee on Wednesday outlined the Senate’s draft of the state’s two-year budget, restoring money sought by Gov. Neil Abercrombie for early childhood education, cash incentives for entrepreneurs, and information technology that was left out of the House’s version.
The Senate’s budget draft reflects the upgraded forecast from the Council on Revenues that was released this month after the House had completed its work. But the draft does not account for the tentative agreement reached over the weekend between the state and the Hawaii State Teachers Association on a new four-year contract because the deal has yet to be ratified.
Sen. David Ige, the chairman of the Senate Ways and Means Committee, cautioned that lawmakers may not have enough money for some of the tax incentives under consideration this session, such as income tax relief or an expansion of film production tax credits, if other public-sector unions receive contract terms similar to the teachers’ roughly 3 percent annual pay raises.
Ige (D, Pearl Harbor-Pearl City-Aiea) said lawmakers could also be forced to cut more from Abercrombie’s spending request. "My guess is if there are collective bargaining contracts that are presented at about the 3 percent level, that we would have to reduce the budget further than what the Senate has right now," he told reporters.
The Senate chose to take a middle path on the budget, with less spending than Abercrombie requested but more money than the House offered. House and Senate budget negotiators will meet in April to prepare a final draft before session ends in May.
"I think that the Senate budget is a good compromise," Ige said. "Obviously, we did not have the funds available to fully support every single request that the governor made. But I do think that we’ve identified and funded the most important ones, at least from the Senate perspective."
On paper, the Senate’s budget draft — $11.9 billion in fiscal year 2014, $12.1 billion in fiscal year 2015 — is higher than both the governor’s and the House’s versions. But the higher figure is due to the inclusion of state Department of Hawaiian Home Lands trust fund money that was not part of the two earlier drafts.
In general fund spending, the area of the budget over which lawmakers have the greatest discretion, the Senate calls for $6 billion in fiscal year 2014 — compared with $5.9 billion by the House and $6.1 billion by the governor — and $6.2 billion in fiscal year 2015 — compared with $6 billion by the House and $6.29 billion by the governor.
The Senate agreed with Abercrombie and the House on the need to make a substantial down payment on the state’s $16 billion unfunded liability in the public-worker health care fund, with $100 million in fiscal year 2014 and $100 million — $5 million less than the governor’s request — in fiscal year 2015. Senators also have a separate bill that would gradually ramp up the payments to $500 million a year, the amount experts calculate is necessary to pay down the liability.
"We’re at least satisfied that everybody is still in agreement on that approach," said Kalbert Young, state budget director.
The Senate put down $1.6 million in fiscal year 2014 and $24.9 million in fiscal year 2015 to finance Abercrombie’s early childhood education initiative. The preschool program would at first target 4-year-olds who would have been eligible for junior kindergarten, which is being eliminated in the 2014-2015 school year, and could potentially expand to all 4-year-olds statewide.
The senate also agreed to spend $4 million in fiscal year 2014 and $4 million in fiscal year 2015 on Preschool Open Doors, the existing child care subsidy for low-income parents. Ige said expanding Open Doors could help build preschool capacity.
The House did not include any money in its budget draft for the governor’s early childhood education initiative. House leaders have also spoken skeptically about the scope and the eventual cost of universal preschool, leading many at the state Capitol to doubt the House’s enthusiasm.
On Wednesday afternoon, the House held a private caucus in which Rep. Roy Takumi (D, Pearl City-Waipio-Pearl Harbor), chairman of the House Education Committee, made a presentation on the benefits of early learning. "No one said, ‘I oppose this,’" Takumi said afterward. "But I think some people said, ‘Are we going too fast? It seems like we’re rushing this.’"
The Senate’s draft also directs more money — $25 million in fiscal year 2014 and $30 million in fiscal year 2015 — to the spending formula at public schools that is weighted to student need rather than school enrollment. The House had called for $12.9 million in extra money.
Senators opted to partially fund Abercrombie’s Hawaii Growth Initiative, a cash incentive for entrepreneurs, with $8 million in fiscal year 2014. The Aber- crombie administration had asked for $10 million in each of the next two fiscal years.
Senators, unlike lawmakers in the House, also backed most of the Abercrombie administration’s request for information technology upgrades to the state’s aging infrastructure.
The Senate did not match the House’s decision to eliminate $55 million in funding for more than 930 state job positions that have been vacant for more than a year. Ige said the Senate did not have enough time to fully consider the House’s strategy.
The Senate budget draft contains $2 billion in fiscal year 2014 and $990 million in fiscal year 2015 for state construction projects, which is higher than the House.
Senate Minority Leader Sam Slom (R, Diamond Head-Kahala-Hawaii Kai) said Ige’s description of the budget draft as conservative is a "misnomer," because it would increase state spending over this fiscal year. "We’re talking about increases in existing programs. We’re talking about new programs," Slom said.
