Gov. Josh Green has officially released his proposed state budget, laying out would-be plans and priorities for fiscal years 2026 and 2027. The document now goes to the Legislature — which must work with Green to fulfill ambitious objectives, including adding housing, building up the state’s health care workforce and funding climate-related necessities.
The governor’s plan is reasonable — and should be palatable to taxpayers, in that income taxes were reduced by notable proportions last year. Hawaii households are projected to have more money in their pockets over the next two years, while Green hopes that adding more housing will hold rental and purchase costs down. He also promised “a big push on homelessness and health care.”
As he consistently has done, the governor framed his proposals as oriented toward working families and “vulnerable Hawaii residents” — two very large segments of this state’s population. It’s a warranted and urgent orientation, given that the Aloha United Way’s 2024 ALICE report shows nearly half of Hawaii’s residents are struggling: 33% identified as ALICE (Asset Limited, Income Constrained, Employed) and 11% living under the federal poverty line.
To build support for the budget asks, Green said he’s engaged with Senate Ways and Means Chair Donovan Dela Cruz and House Finance Chair Kyle Yamashita in advance of the legislative session. The goal: setting up a “collaborative process.” Success or failure of the strategy is a test of Green’s persuasive pull, and will reveal itself over the next few months. If this results in a smoother session, with a measured legislative work flow and few end-of-session pile-ups, the approach would be a model for future sessions. Should logjams and intractable disagreements erupt, however, Green will share responsibility with legislators.
A focus on housing is clear, with roughly a third of the spending in each budget year steered toward building affordable housing and infrastructure, and sheltering those most vulnerable to homelessness.
Notably, as early indications show some legislative enthusiasm for funding workforce housing — affordable to households earning above the low-income threshold typically favored for government subsidies — the proposed budget allocates $75 million in each fiscal year for a “Tier II” Rental Housing Revolving Fund, supporting development of housing for those earning 60% to 100% of area median income (AMI). Another $50 million is directed to the Rental Housing Revolving Fund, to support housing for those earning less than 60% of AMI. Additionally, $20 million is requested in each fiscal year for the Dwelling Unit Revolving Fund, supporting infrastructure investment.
The largest portion of housing funding, nearly $150 million, is requested for projects to transform portions of urban Honolulu: $56 million to redevelop the 70-year-old, 364-unit Mayor Wright public housing into a 2,448-unit, mixed-use complex that includes housing for low- and middle-income families; $30 million for the newly funded, much-debated Aloha Homes Program, which will develop workforce-housing towers built on state lands with 99-year leasehold units; and $62 million for University Village, a transit-oriented development near the rail line and University of Hawaii-West Oahu.
Another $60.8 million is directed to homelessness programs: $50 million each fiscal year to continue expanding kauhale development, along with contracting for services statewide; and $10.8 million each fiscal year for Housing First and the Rapid Re-Housing programs, homelessness outreach and civil legal services. The state has become a more active partner with counties in teaming up to provide kauhale — self-contained “villages” for people who are homeless or at risk of homelessness — with 16 active statewide.
Student housing at the UH also gets a nod, with $25 million proposed each fiscal year “to ensure the existing dorm inventory remains active.” Watch for debate on this line item: In January, Green rejected a request for $80 million to renovate a neglected UH dorm that has been vacant since 2018.
Commitment to shore up residents’ access to health care is seen in an additional $15 million proposed in each fiscal year for the Health Care Education Loan Repayment Program (HELP), touted as a cost-efficient strategy to build up and stabilize Hawaii’s health care workforce. So far, the program is pulling its weight: In its first year, HELP provided debt relief to more than 900 primary care and mental health care providers who have committed to practice in areas here with a documented shortage of health professionals.
Much uncertainty remains over Green’s efforts to find revenue for climate resiliency projects and to protect natural resources; over the extent of funding ultimately needed to settle Lahaina fire litigation; and shortfalls that may develop because of changing federal priorities. It’s now up to the 2025 Legislature to demonstrate collaborative leadership and commitment to resolving this array of looming issues.
