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Editorial: COVID realities will guide budget

The task is unenviable — planning a state budget when just about every number is a moving target. It’s an arduous job, but somebody’s gotta do it.

In Hawaii’s case, it begins with Gov. David Ige and his staff of number crunchers. It will continue in the Legislature, where lawmakers will need to work closely with the administration to craft a spending plan that will protect and strengthen critical public services during the pandemic storm.

We are at the midpoint of the state’s budgeting process. Last year at this time, Ige made his proposals for spending in the next two fiscal years. It was before the COVID vaccine and at the end of a year many would consider the worst of times. His budget was necessarily glum, calling for $1 billion in painful cuts.

On Monday, the governor released his supplemental budget, a regular exercise in which adjustments are made to bridge the estimates of last year with the realities of this year, and new projections for the months to come. His assessment, overall, was fairly rosy but packaged with a warning that uncertainty still rules.

Ige has presented the Legislature with his proposal for a 10.2% increase in the operating budget and a 12.2% increase in general fund spending. The boosts, he said, are possible thanks to a strengthening economy and an “astounding” 27.3% in general fund tax revenue growth so far in 2021. This brings the operating budget to $16.9 billion in fiscal year 2023; the general fund budget to $8.7 billion.

His summary: “Our budget proposals for the next year transition Hawaii’s health system and economy from focusing on pandemic response to embracing a new normal that carefully reopens our islands for business and social interaction.”

That said, COVID-19 still lurks, with the omicron variant proving nasty and fast-moving, bringing no end of precariousness. Thus, another proposal, to be handled in a separate spending bill: a $1 billion deposit into the Emergency Budget and Reserve Fund to replenish what had to be drawn down during last year’s time of need.

House Finance Chairwoman Sylvia Luke is already taking aim at this proposal, countering that socking away that much money is unwise when the state has so many crucial upfront needs.

Ige’s logic, however, seems solid. He cited two critical cash infusions: $1.6 billion in American Rescue Plan Act funds from the federal government and a $750 million working capital loan used to make payroll. The governor has used those numbers to decide on $1 billion as the right amount of cushion, especially given that we simply can’t count on another such infusion of federal cash.

Another sound proposal is one to address a shortage of medical professionals on the neighbor islands, a situation that has grown more pronounced during the pandemic. Ige’s budget calls for adding 20 permanent positions and $2 million to the John A. Burns School of Medicine and $1.75 million to support University of Hawaii nursing programs.

UH President David Lassner said the money would help address a problem that has long plagued the state. The funds for the medical school, he said, would bolster a new program to develop residencies for doctors on the neighbor islands.

“What we know is that where medical students practice in their residencies after their medical education is the best predictor of where they will serve as professionals in the health care community,” Lassner said.

It will be up to the Legislature to debate the relative optimism and overall soundness of Ige’s proposals. By the time the session is underway in January, lawmakers will be armed with an updated economic forecast from the state Council on Revenues, and omicron will have made its presence felt even more, piling another layer of concern. Lawmakers will need to set aside their personal political ambitions (2022 is an election year) and focus on the greater good.

We are still in the era of having to plan for the worst, but spending wisely does provide hope that we can be ready while the coronavirus keeps jerking us around.

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