A budget proposal sent to the Capitol is like a ship launched into rough seas. Every state agency and private interest group in Hawaii will be there in a few weeks, churning the waters, trying to secure their own share of public funds.
Whether the administration’s budget survives such buffeting depends on Gov. David Ige’s ability to sell his particular priorities to the lawmakers who craft the compromise document
finally sent to his office.
At this point, the governor’s proposal, a $13.7 billion spending plan, seems to have a strong internal logic that should help him make his case. It’s encapsulated in the document’s opening thesis statement:
“The administration is focused on ensuring the state’s fiscal stability now and in the future. Although the state’s current economic conditions are favorable — the lowest unem-
ployment rate since February 2008 with the visitor and construction industries leading the way — they cannot be taken for granted.”
As a sign of some confidence in that economic stability, Ige has penciled in $488 million more from the general fund than he and his advisers expect the state to collect in taxes and other revenues. That’s not usually the mark of fiscal prudence, but the governor has been endowed with a cash surplus of $828 million at the end of last fiscal year.
That’s a healthy margin, but both the executive and legislative branches should resist cutting into it much further. The state’s fortunes have been known to turn south on short notice, so a surplus should be held in abeyance.
Where Ige should find support are for his added expenditures in areas that have long been neglected — including a plan to aggressively pay down liabilities for state workers’ retirement benefits and upgrade the state’s decrepit information technology systems. These policies ultimately will build the state’s capacity and efficiency, lessening the financial burden over the long term.
Much has been made of the enlarged investment in affordable housing, which will be critical to success. For too long the state has not aggressively pursued partnerships that could produce more units within reach of lower-income residents. This leaves many families living paycheck to paycheck, many falling into homelessness, with all the social and economic costs that accrue from it.
But among Ige’s other “pressing demands” is education. An extra $250 million has been carved out for operations and capital projects at public schools and the University of Hawaii.
The right instinct is in evidence here: Most of the money is earmarked for filling anticipated shortfalls and attacking the facilities maintenance backlog.
In addition, it’s encouraging to see Ige try to make good on his campaign pledge to direct more education funds to the campus level, empowering the local school administration. He’s accomplishing this by increasing the pot of funds allocated through the state’s “weighted student formula,” money that is managed by school principals.
Ige’s budget doesn’t fully reflect the realities on the ground, however, so some legislative arm-wrestling is in store. The challenge will be to allow for some accommodations, but not at the expense of effective invest-
ments in long-term goals.
For example, the omitted expeditures certain to find their way back onto the spreadsheet include
$1.8 million for tenured teachers’ sabbaticals, bonuses and license renewal fees, items that were assured in the teachers union contract.
The governor favors only $9.8 million of the $16.2 million UH sought in budgetary add-ons. He places a premium on appropriations for research and innovation, through the UH Cancer Center and other institutes, rather than on athletics. That’s a defensible posture, but he’d better prepare for a fight on that front.
He also prefers addressing the deferred maintenance rather than approving requested bond financing for new projects. That’s good — allowing facilities to continue deteriorating is a penny-wise, pound-foolish approach that this state has tolerated for too long.
There are other urgent needs the budget will need to resolve, not the least of which is replacing its outdated and crumbling correctional facilities.
Ige has promised to unveil an initiative responding to this imperative, likely when he makes his State of the State address in January.
The administration’s overarching concern is for governmental transparency and efficiency, both of which will be served by its efforts to transform the state’s outdated information technology. Conveying the critical nature of that investment will be one of the challenges ahead.
More broadly, Ige proposes the development of formal budget-reserve and debt policies — a wise move, even when budget deficits seem to have receded into the past.
They’ll surely be part of Hawaii’s future, and it’s best that we prepare now.
