Hawaii’s astonishing budget surplus continues to benefit the entire state.
Luckily for the state, there are still plenty of dollars coming into the treasury.
According to a Hawaii Public Radio report last week, “the state’s $1.5 billion rainy day fund is the largest ever.”
At the same time, when the Legislature convened in January, the state had plenty of carryover funds — money that hadn’t been spent or appropriated in previous budgets.
Hawaii’s budget isn’t unique: Budget surpluses are a national trend. In fact, Hawaii is one of 34 states that plan to further increase the size of their rainy day fund balances, according to data from the National Association of State Budget Officials.
Hawaii’s budget is similar to many other states’ budgets, which are “funded by one-time expenditures of prior year surpluses.”
Despite the economic loss caused by the Maui fires, Hawaii’s state budget shows a strong recovery effort, which has been accompanied by a large infusion of funding to the state from the federal government.
In its latest report, the state Revenue Board predicted that continued budget surpluses “will spur growth and mitigate some of the direct impacts of the fires.”
The move follows Gov. Josh Green’s decision to mark a series of bills for veto protection because of their impact on the state budget.
In discussing a possible veto, Greene carefully warned that “the state will need to make up for projected revenue losses and will need to find a way to make up for the massive income tax cuts that will grow over the next eight years.”
Another bill the Greens could veto is a bill that would allocate $450 million for Maui recovery. He’s not opposed to spending the money, but has indicated he would rather put it in a major disaster fund. This makes sense for the governor because he doesn’t have to ask permission to spend it; only the governor has control over the funds.
In discussing a possible veto, Greene said it reflected “the need to prioritize Hawaii’s families affected by Hawaii’s severely high cost of living, our state’s rising home prices and the Maui wildfires.”
The governor has been cautious about state spending, but the budget surplus gives him more than some wiggle room.
Additionally, the Board of Revenue said it expects General Fund increases to benefit from the economic impact of a favorable labor market and a favorable outlook for the construction sector over the next three years, and it is not asking states to hold back on spending. In good economic times, it is wise to spend what you have.
In fact, if there was any budget advice to give to Josh Green heading into the summer, it would be to try not to laugh too much every time he picks up the state economic report.
Richard Borrecca writes about politics on Sundays and can be reached at 808onpolitics@gmail.com
