The massive infusion of federal dollars during the pandemic was meant to buoy the state’s economy after the beating it took from COVID-19 shutdowns and disruptions.
And the economy did recover, better than expected, so that coffers were filled to overflowing with one of those rare finds in state government: a surplus.
Now as the Legislature moves into its final round to seek agreement on the budget and other surviving bills, the goal is to find the right balance between addressing the most critical needs of the people and making investments toward a healthy economy. These investments should involve savings, as well as finding ways to encourage key state pursuits.
One of these is the continuation of astronomy atop Mauna Kea. Hawaii leaders need to think about diversifying the economy, and this is certainly one important pathway.
The proposed overhaul of the summit’s governance should be shelved. Even the compromise that would keep the University of Hawaii at the helm of the astronomy campus but divest it of other summit duties would risk sending the wrong signal about the state’s intentions.
And preparations for the near future — namely, the very next legislative session — need some attention now. It is possible that the pandemic, global unrest or some other catastrophe will dampen the state’s prospects, and the chances of more federal aid seem remote.
But it’s right that lawmakers want to leverage this windfall to solve problems — the affordable housing shortage being on top of the list. There are also bills to help those in the greatest need stretch their household income.
Most require state revenue, but the proposed increase in the minimum wage would call on the private sector to raise the salary floor in the current tight labor market (House Bill 2510).
Fortunately, both chambers seem to be in agreement that an $18 hourly rate should be the end point, but while the Senate would mandate that top scale in 2026, the House stretches the pay-raise timetable for two more years. What’s important is that they do reach an accord, one that is not too punishing to businesses: High-cost Hawaii still lags many states in the current minimum, which is still $10.10.
As for the actual government spending — or diversion of funds back to the public — here are the top-ticket items:
>> A century has passed without fulfillment of the Hawaiian Homes Commission Act. So the provision of $600 million to get the Native Hawaiian beneficiaries off the persistent waiting list is more than justified, as HB 2511 and Senate Bill 3359 head to conference.
Amendments so far have provided more guidance to the state Department of Hawaiian Home Lands on allotments for specific projects, guidance which is warranted. This program, important as it is, demands strict guardrails. Inroads on DHHL housing, of course, also will help ease Hawaii’s overall housing shortage.
>> SB 2372 would provide $300 million for the Rental Housing Revolving Fund to fill out the financing packages for the state’s other affordable housing projects. There are developers queued up for this subsidy, according to the Hawaii Housing Finance and Development Corp., so it’s crucial that this appropriation is made.
>> HB 2233 and SB 2150 would enable those eligible for the Temporary Assistance for Needy Families programs to receive up to $500 monthly for housing assistance. This would be a worthy subsidy, provided during the families’ participation in a mandatory work program.
>> HB 510 would make the state earned income tax credit refundable and extends that credit for another six years. This means that working individuals or families with little to no income-tax liabilities would get a boost. These are households that do pay into state coffers through the general excise tax. Other states have found this to be an effective way to get help where it is needed the most.
>> In an election year, it’s not surprising that lawmakers would want to distribute a little money to the broader public, so a 2021 measure, SB 514, has been revived as the likely vehicle for a tax refund, between $100 and $300 per taxpayer and dependents. Since the state is so flush with cash, there’s a good argument that at least some should go directly back to public pockets.
This would be an expansion on the tax rebate proposed by Gov. David Ige, who also asked lawmakers to remember the state’s savings account. The pandemic drew down the “rainy day” fund, which the governor wanted replenished to the tune of $1 billion. Legislators had their own plans for the surplus, which didn’t include squirreling away money, at least not initially.
But on the Honolulu Star-Advertiser’s “Spotlight Hawaii” webcast last week, Ige said between $500 million and $1 billion could adequately restock the fund. The lower end of that range is reasonable. Lawmakers should make an allotment on that order.
On the whole, the Legislature seems poised to make substantial advances toward the state’s longstanding goals — which is good, as long as these are measured gains. The state needs the capacity to stand on its own next year, without relying on federal largesse.
