Gov. Josh Green has unveiled his proposed state budget for the next two fiscal years, which accounts for record tax cuts for residents that begin in January, the state’s $800 million share of a proposed $4.037 billion settlement to settle lawsuits in the aftermath of the 2023 Maui wildfires and includes likely raises for unionized workers.
Green’s two-year budget also would boost the state’s $1.5 billion rainy day fund to $2 billion and roll over more than $500 million in each of the next two fiscal years.
The budget cushions could help Hawaii absorb potential cuts in federal programs that previously cost the state $300 million annually during President-elect Donald Trump’s first term when he slashed Medicaid benefits — or, as Green put it, “in case there is a ripple effect from the federal government.”
The savings also will help preserve Hawaii’s positive bond rating and keep interest payments low, Green told reporters Monday at the state Capitol during his annual budget briefing.
A major unknown budget wrinkle could come if the Hawaii Supreme Court rules in favor of lawyers representing insurance companies opposed to terms of the Maui settlement that would bar them for suing plaintiffs.
Other than the insurance companies, all of the other parties want to settle, including survivors and victims’ families, Green said.
The attorneys “from the mainland” want an extra $1 billion, which Green called “sinister. And it’s got to stop.”
“We are trying to care for the people that went through so much,” he said.
A court decision that blows up the proposed settlement means “there will be a lot of litigation,” Green said.
A ruling is expected in January.
As proposed, the settlement would resolve over 650 lawsuits, keep Maui County from going bankrupt and likely prevent Hawaiian Electric from becoming insolvent — all while helping Lahaina survivors heal and move on with their lives, Green said.
Green wants the Supreme Court to rule in favor of the settlement as proposed.
“I pray and hope it will benefit the people of Lahaina and not the insurance industry,” Green said.
On a lighter, more positive note for Maui, Green said he’s working with the National Football League to possibly have the Los Angeles Rams hold their training camp on Maui.
To laughter — and perhaps only half jokingly — Green also said he’d like to see his favorite team, the Pittsburgh Steelers, also become a preseason fixture in Hawaii.
The NFL, Green said, “is very interested in us.”
Green also wants to see “friendly,” perhaps Olympic-style competitions in Hawaii that would bring together teams from Japan, South Korea and the U.S. that would further boost a post-COVID-19 Maui tourism rebound.
His budget asks for $10.472 billion in state general funds in fiscal year 2026 and $10.543 billion in fiscal year 2027 — totaling a 1.5% increase ($149.9 million) the first year and a 2.1% boost ($200 million) in the second.
It’s based on the Council on Revenues’ September economic forecast.
The council’s upcoming January forecast could dampen or buoy Green’s budget plans.
As for now, Green said that financially, “we’re in a good place as a state.”
Historic tax cuts passed in 2023 by the state Legislature are covered in Green’s two-year budget.
The cuts will increase over the next seven years, taking Hawaii from the second-highest state in terms of taxes to the fourth lowest, Green said.
For both individuals and families, he called the cuts “significant.”
They will start seeing smaller withholding taxes in their paychecks in January, Green said.
For some people struggling financially, starting the new year with more money in their paychecks could make the difference in being able to “pay rent or not,” Green said.
Green’s budget also calls for the state to continue programs launched in the first two years of his administration, such as student loan forgiveness up to $50,000 for each of two years for a long list of health care workers to continue working in Hawaii, as long as they also treat low-income patients.
The state has provided $30 million annually toward the Hawaii Education Loan Repayment Program, or HELP, augmented by some private donations and federal funding.
“It works,” said Green, a medical doctor. “Otherwise, people will leave Hawaii. … It reduces the cost of living for our health care community, which means they stay here.”
HELP is designed to retain and, perhaps, recruit expatriate health care workers back from the mainland with Green’s goal of ending Hawaii’s perennial shortage of health care workers.
The budget also calls for continued expansion of his tiny-home kauhale projects to house communities of homeless people that began while he was lieutenant governor.
They receive a range of social service assistance and medical treatment, which Green said reduces their reliance on Hawaii’s health care system while improving their quality of life.
Green previously announced most of his budget goals to the Honolulu Star- Advertiser, but teased reporters Monday that the state should expect an announcement of an unspecified windfall in January.
He repeated his desire to ask legislators for the power to dedicate interest on the state’s rainy day fund toward addressing climate change and better ward off another wildfire disaster, especially on the west sides of all islands.
But the $500 million or so in annual interest would pale next to the $100 to $200 million needed annually.
So Green will continue to push legislators in his third session as governor to assess some form of “green fee” or “tourism impact fee” on incoming visitors to help cover the state’s costs.
In response to resistance, notably Hawaii’s tourism industry, Green said a compromise could include a combination of rainy day interest and a slight increase in the hotel room tax.
“That would really help us,” he said.
At a time when Green and legislators continue to work to make life more affordable, he emphasized that no climate-related fees would be charged to residents.
The budget he unveiled Monday was the first to cover two years because much of the prior biennium budget included requests from his predecessor and former boss, Gov. David Ige.
So for the third year of Green’s administration, he said “this is our budget, our first one.”
It represents the state’s “values” by helping children, working families, kupuna and homeless people improve their lives and to continue to live in the islands, he said.
“This is the starting point,” Green said. “People are still really struggling.”
By the numbers
$10.472 billion
State general funds requested in fiscal 2026
1.5%
Total increase requested in first year, or $149.9 million
$10.543 billion
State general funds requested in fiscal 2027
2.1%
Total increase requested in second year, or $200 million
