Gov. Josh Green told state legislators Wednesday that he plans to eliminate or reduce over $1 billion in spending on 22 projects from the state budget because of a shortfall in projected revenue forecast last month.
The cuts — $554.7 million in fiscal year 2024 and $533 million in fiscal year 2025 — include $72 million for a proposed, controversial First Responder Technology Campus in Mililani. Green said Honolulu police do not want to relocate to the campus, among other concerns.
State Sen. Donovan Dela Cruz chairs the Senate Ways and Means Committee and backed the campus plan. But after meeting with Green over the weekend, Dela Cruz (D, Mililani-Wahiawa-Whitmore Village) said he understands Green’s cuts.
Green is required by the state Constitution to produce a balanced budget and had no alternative but to cut spending, Dela Cruz told the Honolulu Star-Advertiser.
“This is all a reaction to the Council on Revenues, which reduced the revenue quite significantly,” Dela Cruz said. “You can’t argue with the numbers. … That’s what we’ve got to deal with.”
In a statement later, Dela Cruz said, “I look forward to developing a path forward with the Administration on determining if the land in the Mililani Technology Park should pivot and be used for indoor farming, ag-tech, and value-added food production.”
In March, the Council on Revenues projected that state revenue would grow 2%, with a surplus of $423 million by the end of the 2024 fiscal year and $426 million in fiscal year 2025.
By May, the Council forecast a net loss of 1% that “put us into the red,” Green said.
Rather than deposit another $1 billion into the state’s “rainy day fund” as proposed by the Legislature over the next two fiscal years, Green instead plans to cut it in half, leaving the state with $1.5 billion in reserve over the next two years.
The amount in the rainy day fund will preserve Hawaii’s Double A+ bond rating to keep interest rates on state borrowing low, said Luis Salaveria, the state’s director of budget and finance.
Green’s budget cuts leave intact core areas supported by him and the Legislature over the course of the past legislative session, which he called “a ton of essential services that are terrific that make historic investments in health care, housing, homelessness, environment. A lot of important work has gone into this from the House and Senate.”
Green still supports a new Aloha Stadium and construction of a new Oahu Community Correctional Center, but focused on cutting other large construction projects that also have yet to begin, along with reducing — or eliminating altogether — funding for projects that cannot spend the money that the Legislature budgeted by end of the 2024 fiscal year, which begins July 1.
Projects that lost their funding can come up again before the next Legislative session where they “need to be fully debated in public.”
Green said that “historically” Hawaii governors quietly eliminate spending when faced with revenue shortfalls to balance the budget.
“I prefer to be straight up and upfront,” he said.
Salaveria told the Star-Advertiser that “most” of the cuts were focused on projects that could not spend what they were budgeted.
They include a reduction of $120 million from the original plan to provide $170 million for construction of teacher housing; an $88.8 million cut to the $93.8 million budgeted for water/irrigation infrastructure and irrigation system management; elimination of $25 million of $50 million proposed for renovations and improvements to state parks; and removing $61 million out of a proposed $86 million for design and construction of transit-oriented development in the Iwilei-Kapalama area.
Other funding was completely eliminated for “infrastructure improvements for regional economic development” ($50 million); Kakaako street upgrades ($18.5 million); and $60 million for the state Department of Land and Natural Resources’ Division of Boating and Ocean Recreation.
The Legislature now has 10 days to consider whether to override any or all of Green’s 22 so-called line-item budget vetoes and line-item reductions.
Dela Cruz said that Green’s approach to balancing the budget was done “in an efficient way to lower the spending amounts.”
Green said he still plans to spend much of the $200 million in so-called discretionary funding granted by the Legislature to help the Hawaii Tourism Authority, public schools and the University of Hawaii.
STATE CUTS BY AMOUNT
Proposed line-item reductions and vetoes through fiscal year 2025:
$120M
(out of $170 million)
for teacher housing
$88.8M
(out of $93.8 million)
for water/irrigation infrastructure and irrigation system management
$72M
(out of $72 million)
for First Responder Technology Campus in Mililani
$61M
(out of $86 million)
for Iwilei-Kapalama transit-oriented development design and construction
$60.2M
(out of $60.2 million)
for the state Department of Land and Natural Resources’ Division of Boating and Ocean Recreation
$50M
(out of $50 million)
for infrastructure improvements for regional economic development
$50M
(out of $100 million)
for solar energy storage loan program
$42M
(out of $47 million)
for Kalaeloa electrical upgrades
$25M
(out of $50 million)
for renovations and maintenance for state parks
$18.5M
(out of $18.5 million)
for Kakaako street upgrades
Source: Office of Gov. Josh Green
