Hawaii lawmakers outline plans to make up budget shortfall

HONOLULU — Hawaii lawmakers said Monday they plan to plug a projected $1 billion hole in the state budget for the upcoming fiscal year by using money from the rainy day fund, reducing vacancies in state bureaucracies and issuing bonds.

The shortfall developed as the spread of the coronavirus pandemic led to a shutdown of tourism and other sectors of the economy in Hawaii. Economists anticipate sharp drops in hotel tax and general excise tax revenue.

The House Finance Committee and Senate Ways and Means Committee received written testimony on the plans. Lawmakers didn’t accept oral testimony from the public because they closed the Capitol to the public to maintain social distancing.

Representatives and senators didn’t propose furloughing or cutting the pay of state employees. Gov. David Ige last month said he was discussing potential cuts with unions and lawmakers but no decision had been made. Unions said Ige had proposed 20% cuts.

Lawmakers also proposed allocating funding from the federal coronavirus relief bill to Kauai, Maui and Hawaii counties. Honolulu already received its funding from the bill, as the measure allocated funds directly to cities with populations of more than 500,000 people.

Legislation proposes awarding $80 million to Hawaii County, $67 million to Maui County and $29 million to Kauai County. Honolulu has already received $387 million.

To make up for the $1 billion revenue shortfall, lawmakers proposed to use the following funds:

— $395 million from the current balance of the state’s rainy day fund.

— $250 million in cash from the Rental House Revolving Fund, which provides low-interest loans to people building affordable housing. The state would replace the money by issuing general obligation bonds.

— $150 million from vacant positions and lapsed, unspent funds from the Department of Education for the current fiscal year ending June 30.

— $136 million from vacancies and lapses in all other departments for the fiscal year ending June 30.

— $71 million from vacancies in all other departments for the fiscal year beginning July 1.

— $25 million from the Mental Health and Substance Abuse fund, which currently has a balance of $50 million. The fund consists of general funds used to pay for services, which are then reimbursed by the U.S. government’s Medicaid program. Hawaii expects to spend $25 million on services, so the state is planning to remove the remaining $25 million.

— $20 million appropriated from the general fund for Aloha Stadium redevelopment, which will be replaced with general obligation bonds.

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