Hawaii lawmakers to reconvene in a trimmed session to patch budget holes
Hawaii lawmakers will return to the state Capitol on Monday to reconvene in a compressed six- to 10-day session to advance proposals to cope with a looming budget shortfall and to try to prevent furloughs and pay cuts for public workers.
Lawmakers are anxious to head off any effort by Gov. David Ige to impose furloughs, and have been scouring the state budget for pockets of funding that can be used to offset the anticipated collapse in state tax revenues because of the coronavirus pandemic, sources said.
Ige has said the state faces a $1.5 billion budget shortfall for this year and the fiscal year that begins July 1, and union leaders were told the state planned to impose furloughs equal to a 20% cut in pay on May 1. The administration later amended that plan, saying the furloughs would not be imposed before June 1.
House Speaker Scott Saiki and Senate President Ron Kouchi oppose Ige’s plan, and Saiki said Thursday the main purpose of the special session is to explore other options to resolve the budget shortfall.
When they return to the Capitol, lawmakers plan to authorize Ige to borrow money from the federal government to cover the cost of running state government, a temporary solution to the state budget crisis that was proposed last month by U.S. Sen. Brian Schatz.
If the administration chooses to borrow from the federal Municipal Liquidity Facility, the state would need to repay the money within two years.
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The Legislature also wants to authorize the administration to issue “pension obligation bonds,” which are financial instruments that would allow state government to borrow the money it needs to make annual pension payments on behalf of public workers.
Deputy Director of Finance Robert Yu told lawmakers earlier this spring the administration has been investigating that option as well.
The state contributes about $500 million a year to the Employees’ Retirement System to cover its pension obligations for state workers, and pension bonds would allow the state to borrow that money in the near term and repay it later.
Lawmakers also plan to tweak various appropriations for state construction spending to ensure that enough money has been earmarked for “shovel-ready” projects that can be awarded and launched quickly.
Increasing government construction spending has been a long-standing strategy for boosting the economy during economic downturns, but that money also needs to be repaid in the years ahead. State general obligation bonds are generally repaid over 20 years.
State officials also hope the federal government will relax the restrictions on funding that has been provided to the state through the CARES Act. States are required to use that money to cope with the coronavirus epidemic and are not allowed to use those funds to cope with their budget shortfalls.
The Senate also needs to use the session to review and act on more than 260 nominations to boards and commissions that Ige has submitted to lawmakers, Kouchi said.
Saiki said lawmakers will also consider a request for additional funding for the Hawaii Emergency Management Agency, and said the three neighbor island counties have asked for money from the federal CARES Act to support state and local governments during the pandemic.
The state was expected to receive $867 million in CARES funding, but none of that money has flowed yet to the three neighbor island counties, Saiki said.
Lawmakers recessed the regular session March 17 and closed the state Capitol indefinitely two days later after state Sen. Clarence Nishihara tested positive for the new coronavirus.
Saiki announced last week the Capitol would remain closed until May 31 to comply with Ige’s stay-home order, but said Thursday that plan has changed. Lawmakers said Ige issued a letter declaring lawmakers to be essential workers, which allows them to return to the Capitol for the short session this month despite the stay-home order.
The Capitol will remain closed to the public, with only lawmakers and staff allowed to attend the hearings and floor votes. The public will be able to submit written testimony, and the hearings will be livestreamed online, lawmakers said.
Saiki said he expects only the Senate Ways and Means and House Finance Committees to hold hearings on bills, and those hearings will be held in the Capitol’s basement auditorium to allow for social distancing. Kouchi said confirmation hearings for Ige’s nominees will be held in two Capitol conference rooms and be streamed live online.
Seating will be reconfigured during House floor sessions so that half of the 51 House members will sit in the gallery to allow for social distancing, Saiki said.