Hawaii lawmakers exceed spending cap
by Kim Jarrett, The Center Square, May 6, 2023
(The Center Square) - The $21.7 billion biennial budget approved by Hawaiian lawmakers has raised some eyebrows.
Lawmakers continued their high spending habits, said Keli‘i Akina, president and CEO of the Grassroot Institute of Hawaii.
"Their proposed budget exceeds the state’s legal spending cap by more than $1 billion, and while the state does have a budget surplus, I would think the lessons of the pandemic and lockdowns would have encouraged better budgeting and more fiscal restraint," Akina said in an email to The Center Square.
First-term Gov. Josh Green had some victories in the budget but also came up short in some areas. The Legislature included $280 million for a rental housing revolving fund to aid in the state's affordable housing crisis. Another $150 million is allocated to the Hawaii Community Development Authority to improve housing developments.
About $125 million in tax credits proposed by the governor passed the Legislature. But lawmakers defeated a request to adjust the state's income tax system for inflation or increase the standard deductions.
"Those measures combined would have saved Hawaii taxpayers an additional $194 million a year and protected them from tax increases far into the future," Akina said.
Also shunned was a $50 visitor impact fee proposed by the governor.
The highlight was the approval of an out-of-state physician compact that addresses the physician shortage in the Aloha state, according to Akina. The state is short the equivalent of 776 full-time physicians, according to a report from the Hawaii Physician Workforce Assessment Project.
"Joining the Interstate Medical Licensure Compact will make it easier for mainland doctors to set up practice in Hawaii, as well as put a dent in the state’s physician shortage," Akina said. "I hope next year the Legislature will enact licensure compacts for other healthcare professionals, such as nurses, psychologists and speech and audiology pathologists."
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Legislature on track to violate state's legal spending limit
The proposed budget is $668 million more than the governor requested and doesn't even include almost 30 other measures that require funding
News Release from Grassroot Institute, May 2, 2023
HONOLULU, May 2, 2023 >> The state Legislature’s proposed budget for the coming fiscal year is on track to exceed the state’s constitutionally imposed expenditure ceiling by $1.06 billion — or more than 10% — according to the legislative body’s conference draft bills that were released over the weekend and yesterday.
Created by the 1978 Hawaii State Constitutional Convention, the spending cap allows state spending to grow by the three-year average of Hawaii’s personal income growth.
Keli'i Akina, president and CEO of the Grassroot Institute of Hawaii, said, “The state’s expenditure ceiling was designed as a brake on runaway spending. But lawmakers appear to be ignoring it, which bodes poorly for the public’s trust.”
He noted that in 1978, the convention’s Committee on Taxation and Finance clearly stated that the spending cap proposal was based on “the genuine concern of taxpayers that the costs of government should not consume an increasing proportion of their income.”
“And that concern,” he added, “is just as valid today as it was 45 years ago.”
As of today, the Legislature’s proposed budget for fiscal 2024, as presented in HB 300, would fund the state’s executive branch using about $11.29 billion from the state’s general fund — an increase of $668 million from the budget proposed by Gov. Josh Green.
In addition, almost 30 other bills would also appropriate funding, including for the Office of Hawaiian Affairs and various other agencies and initiatives.
According to the state Constitution, the state’s spending cap can be exceeded only if both the House and Senate approve the spending bills by a two-thirds majority and state their reasons for violating the limit.
Thus, embedded in every spending bill being sent to the governor for his signature is a statement that, “The appropriations made in this Act are necessary to serve the public interest, and the appropriations made in this Act meet the needs addressed by this Act.”
And considering Hawaii is a virtual one-party state, it is highly likely that all or most of these bills will meet that two-thirds threshold and be approved this week.
State legislators plan to vote on the state budget bill, HB300, on Thursday.
1[ 2022 Hawaii Revised Statutes, Title 5. State Financial Administration, 37. Budget, 37-91 to 94 OLD REPEALED. §37-91 Definitions, accessed May 2, 2023.
2] As quoted by “Re: Requirement for Balanced Budget,” Hawaii Attorney General Legal Opinion 97-01, Jan. 13, 1997, p. 2.
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The Grassroot Institute of Hawaii is a nonpartisan, nonprofit research and educational institute devoted to promoting individual liberty, economic freedom and limited, accountable government. Its goal is to improve the quality of life in Hawaii by lowering the cost of living and expanding opportunities for all.
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