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Thursday, November 21, 2024

GOVERNOR'S OFFICE: Governor Ige’s Biennium Budget 2021-23 reflects sudden, sharp reductions


Governor's Office issued the following announcement on Dec. 21.

Link to Governor’s Budget Message and Budget in Brief

Link to Facebook Live – Budget News Conference

Gov. David Ige today unveiled his Fiscal Biennium Budget  2021-23 which includes reductions in both the operating and capital  improvements program (CIP) budgets in the next two fiscal years. The  state anticipates a $1.4 billion shortfall each year of this two-year  period.

“This budget represents sudden, sharp reductions to revenues because  of the pandemic’s impact on the state’s economy and the tax revenue that  funds government services and programs.  Our economy will recover, and  the state’s budget will normalize if we contain COVID-19, preserving the  health of both residents and visitors,” said Gov. Ige. “The key to this  remains the 3W’s – wearing masks, washing hands and watching distances,  as before; and we can now add the vaccine as it becomes available.”

The governor noted that anticipated Congressional action may have an  impact on certain spending and said, “I’m hopeful that federal aid will  allow us to refrain from imposing furloughs until later.”

Gov. Ige announced that he may be seeking emergency appropriations in  separate legislation to support COVID-19 mitigation efforts such as  vaccination implementation, hospital surge staffing and the Safe Travels  program. Prior to receiving the new federal aid, these mitigation  measures were expected to cost $205 million in FY 21 (beginning in  January), and $182 million in FY 22.

BIENNIUM BUDGET OVERVIEW:

OPERATING: The total Operating budget from all  methods of financing includes $15.417 billion in FY 22, and $15.521  billion in FY 23. This represents net decreases below the current level  appropriated for FY 21 of 1.8% ($276.4 million) and 1.1% ($171.8  million), respectively.

GENERAL FUNDS: The request is $7.686 billion in FY  22, and $7.798 billion in FY 23. This represents net decreases below the  current level appropriated for FY 21 of 4.5% ($361.9 million) and 3.1%  ($249.6 million), respectively.

CAPITAL IMPROVEMENTS: The Capital Improvements  Program budget includes $1.236 billion in FY 22 and $1.116 billion in FY  23. Of these amounts, the request for General Obligation (G.O.) bond  funds total: $679.4 million and $512.1 million, respectively. This is  nearly $800 million in G.O. bonds less in FY 22 and FY 23 than in the  previous biennium.

SIGNIFICANT BUDGET PROVISIONS

The Operating Budget includes the following significant requests:

  • Adds debt-service payments of $398.6 million over the two fiscal  years for the Dept. of Education, University of Hawaiʻi, and other state  CIP projects
  • Decreases health premium payments by $603.3 million over two fiscal  years, primarily due to the suspension of OPEB (Other Post-Employment  Benefits) prefunding.
  • Decreases retirement benefits funding by $19.2 million over the two fiscal years.
Employment

  • Adds $17.0 million in FY 22 and $19.4 million in FY 23 for interest  payments for the $1 billion Unemployment Insurance loan the state took  out to provide benefits to people whose employment dried up as a result  of COVID-19.
Health

  • Adds $4.3 million in both fiscal years for salaries at the new state  hospital and $2.7 million in both fiscal years for operating expenses.
  • Adds $6 million in FY 23 to increase the state match for Medicaid to accommodate new enrollments and increasing provider rates.
  • Adds $35.9 million in both fiscal years for operational costs at the  Hawaiʻi Healthcare Systems Corporation’s regional operations.
Social Services

  • Increases Medicaid health care payments by $34.7 million in general  funds and $216.3 million in federal funds in FY 22 and by $55.0 million  in general funds and $148.5 million in federal funds in FY 23.
  • Increases General Assistance payments by $5.4 million in FY 22 and FY 23 to meet projected enrollment increases.
  • Increases the state’s Rent Supplemental Program by $500,000 in FY 22 for rent assistance services.
Education (Dept. of Education and University of Hawaiʻi)

Gov. Ige again noted that he’s hopeful that the federal relief bill  will render some of the planned cuts and furloughs unnecessary.

“I have made education a priority because our public schools provide a  path to prosperity and success for our students. However, I am unable  to leave these programs untouched without decimating the rest of state  government, especially when many of our health and social service  programs are needed now more than ever. To fund programs that assist  citizens in need of food, shelter and jobs, and to ensure public  safety,  the education budget must be trimmed,” said Gov. Ige.

The Dept. of Education is 21% of the of the FY 21 general fund  budget, the second largest behind Budget and Finance, which includes  fringe benefits and debt service for the state.

This budget includes:

  • A reduction of about 70 positions and $165.6 million in both FY 22 and FY 23 for various DOE programs.
  • At the university level, the budget includes reductions of over $70 million over the two fiscal years.
Public Safety 

  • Adds $12.1 million in FY 22 and FY 23 to restore funding for 237.5 positions that were defunded in the current budget.
  • Moves funding from operating expenses to payroll to restore funding for 61 positions that were defunded in the current budget.
  • Provides a cash infusion of $676,222 in FY 22 to the Crime Victim  Compensation Special Fund to cover shortfalls for payroll and operating  expenses.
  • Reduces non-critical operating expenses of $1.8 million in FY 22 and $2.5 million in FY 23.
The Capital Improvements Program Budget represents  the investments the state will make in high-quality infrastructure  projects that are essential to the economic vitality and quality of life  in Hawaiʻi.

“These investments create jobs and sustain our construction industry.  This year, we are prioritizing essential CIP projects to limit  debt-service costs and preserve the state’s flexibility to handle future  economic shocks,” said Gov. Ige.

Economic Development/Housing

“Before the pandemic, affordable housing was one of our greatest needs. The need is even greater now,” said Gov. Ige.

This budget adds $161 million in GO bond infusions for various housing projects:

  • $20 million in FY 23 for the Dwelling Unit Revolving Fund;
  • $25 million in FY 23 for the Rental Housing Revolving Fund;
  • $38 million in both FY 22 and FY 23 to replace the Conveyance Tax  distribution to the Rental Housing Revolving Fund due to the COVID-19  Emergency Proclamation.
  • $40 million to the Hawaiʻi Public Housing Authority for the School Street senior project in Kalihi.
Transportation

  • Using a mix of funding sources, the state will make needed improvements to airports, highways and harbors across the state.
Health 

  • $44 million over the two-year period for improvements and  renovations to health system facilities on all islands including $12  million for Maui Health System.
Social Services/Housing

  • $40 million over the two-year period for Department of Hawaiian Homelands (DHHL) lot development projects, statewide.
  • $10 million for repairs to infrastructure to DHHL subdivisions over the two fiscal years.
  • $10 million for public housing development, improvements and renovations, statewide.
Education (DOE and UH)

  • $300M ($150M in FY 22 and $150M in FY 23) for public school  facilities, from deferred maintenance to health and safety projects and  compliance.
  • $315M ($165M in FY22 & $150M in FY23) at the university level  for modernization, maintenance, capital renewal/deferred maintenance,  and technology renovations across the state.
Public Safety

  • $35 million for a health care unit at Halawa Correctional Facility.
  • Re-appropriating $12.9 million in FY 22 to provide additional  funding for medium-security housing at Hawaiʻi and Maui Community  Correctional Centers.
  • $40 million over the two-year period to provide major repairs,  upgrades and improvements to comply with ADA standards and complete  deferred maintenance at public safety facilities, statewide.
ADDRESSING THE SHORTFALL – MEASURES ALREADY TAKEN

The Ige administration has already taken the following measures to address the $1.4 billion revenue shortfall:

  • Pulled back $197 million of the executive’s FY 2021 supplemental  budget request and legislation. the Legislature further reduced the FY  2021 base budget by $205 million.
  • Temporarily suspended pre-funding of the other post-employment  benefits (state retiree health benefits) liabilities saving $390  million.
  • Restricted 10% of the discretionary portion of the FY21 budget that was approved by the Legislature.
  • Instituted a hiring freeze on 3,000 non-critical position vacancies.
  • To provide additional resources to the general fund, the Legislature  authorized the transfer of $345 million of rainy-day fund reserves and  $303 million from various other funds to the general fund budget.
  • For the first time ever, the state recently issued $750 million of short-term bonds to cover current operating expenses.
  • Going forward, we are targeting cutting program budgets by $600 million every year starting in FY 2022.
  • This was our planning target. In operation, target is being  addressed through program review budget reductions of $350M, fixed costs  savings and various revenue/tax measures.
RE-ENGINEERING GOVERNMENT

“Given the magnitude of the revenue shortfall, state government must  re-engineer the way we provide services. The extent of the expected  revenue loss means that permanent and ongoing changes must be made to  state government. Understandably, these changes will be difficult,” said  Gov. Ige.

The governor noted that in total, over 955 general-funded positions  are being reduced, of which 255 are conversions to non-general funds,  550 are elimination of defunded positions, and 149 positions involve  possible reductions-in-force.

“Together, we can get through this. We have the unique opportunity to  reshape Hawaiʻi for the future – to make it stronger and more  resilient. There is no limit to what we can accomplish when we work  toward a common goal. It will not be easy, but we are committed. Now  more than ever, we must do the right thing, the right way, for the right  reasons,” said Gov. Ige.

Original source can be found here.

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