The Legislature this week approved a record-setting $24 billion biennium budget that includes funding for operations and capital improvement projects for fiscal years 2014 and 2015.
The $24 billion is a sizable increase over previous budgets, but lawmakers in both chambers supported the plan.
Senate Minority Leader Sam Slom, the only Republican in the 25-member Senate, stood alone when voicing concerns about growing spending, and the increased taxes and fees that were added to support it.
Slom, a member of the Ways and Means Committee, said big spending increases are overburdening Hawaii’s taxpayers and small business owners.
Slom, a 17-year veteran of the Legislature, gave his colleagues, the media and the public a detailed alternative budget prepared by the Minority Budget Director Paul Harleman that slashed several billion dollars from the budget, eliminated 1,000 vacant public employee positions and eliminated “ineffective” state programs. The majority party gave no consideration to this proposal.
About half the state’s budget will go toward human services for items including food stamps, housing subsidies and medical care for Hawaii’s homeless and low-income populations. One lawmaker noted the state has the third highest number of homeless people in the nation and the highest rate of food stamp distribution.
Another one quarter of the budget is allocated to public schools for operation and maintenance.
During his 2013 State of the State address, Gov. Neil Abercrombie, a Democrat, asked lawmakers to set aside $20 million for a new state-sponsored early education program for 4 year olds that would have taxpayers paying for children to attend preschool. The Legislature abolished the state’s pre-kindergarten program two years ago because of budget cutbacks. The governor said he wanted to to expand his new program to include state subsidies for younger children at an annual cost of around $100 million.
The proposal, which was backed by many of Hawaii’s preschool education leaders because they would directly benefit from the subsidies, drew criticism from those who maintain parents should continue to pay for their own private preschool costs. Public unions also opposed the plan because they said it is the first step toward a education voucher system. The legislation also depends upon voters approving a state constitutional amendment on the 2014 ballot, which would change Hawaii’s constitution to allow for the expenditure of public money for private institutions.
The governor personally lobbied lawmakers for their support, held his own rally at the Capitol and on Tuesday attended the final debate on the bill. Lawmakers agreed to fund a pilot program for $6 million, leading the governor to blow them kisses and a wave of thanks from the gallery.
Sen. Roz Baker, a Democrat from Maui who is aligned with union leaders, voted against the early education bill, saying she she also believes it creates a voucher system.
Four of 25 senators opposed the plan, including three Democrats who didn’t voice their objections, and Slom, who said the public shouldn’t be burdened with the additional costs of providing “babysitting.”
Some $1.2 billion was set aside for improvements to Hawaii’s deteriorating highways, bridges, harbors and airports as well as repairs and maintenance on virtually every public school campus.
House Bill 200 does not include allocations for several other cost items. For example, another half a billions dollars was set aside for salary and benefit increases for public employees in three main union — the Hawaii State Teachers Association, the Hawaii Government Employees Association and the United Public Worker Union. Budgets for the state Judiciary and the Office of Hawaiian Affairs have separate appropriation bills.
The state will pay $216 million into the Employees Union Trust Fund, pushing back a tiny percent of the $25 billion in unfunded liabilities that Hawaii taxpayers owe union workers for retirement and health benefits.
However, Truth In Accounting’s Sheila Weinberg said, much more still needs to be done to address Hawaii’s crippling debt. Hawaii is ranked by Truth in Accounting as the third worst “sink hole” state in the nation.
To help fund the budget, the Legislature made one major temporary tax increase permanent and raised several other fees on businesses.
The Transient Accommodation Tax paid on hotel rooms was set to roll back to 7.25 percent. But lawmakers, who passed a temporary increase two years ago bringing the rate up 9.25 percent, wanted to keep that revenue stream and had no intention of reducing it. In the end, they officially made the temporary increase permanent. A proposal earlier in the session to increase the tax to 11.25 percent failed.
While the controversial minimum wage increase bills died in the final days of session, there are still several bills that affect regulation, licensing and increased fees for businesses.
Lawmakers also came up with other creative ways to bring in revenue.
Senate Bill 237 will allow the state to sell land under public schools so it can be developed for commercial purposes. The bill, which has angered parents at a number of public schools across the state, would still have to be approved by the electorate in 2014.