In recent weeks, we have been reporting on Hawaii’s “shadow budget.” We found out that a first responders’ campus in central Oahu, even when a bill to create it was stomped on, shaken violently, and killed in the House, could still be funded via the State’s budget bill due to some behind-the-scenes machinations involving the powerful chair of the Senate Ways & Means Committee.
That, however, may change because of some misfortune.
In the most recent meeting of the State’s Council on Revenues, economists came back with a more dire forecast for Hawaii‘s economy, lopping a cool billion dollars off the State’s forecasted revenues.
In response, Governor Green just did something very unusual. He met with legislative leaders, including the senator we mentioned above, and told him that he intends to line item veto parts of the budget bill in order to accommodate the billion dollars that we’re not going to get. Our Constitution, after all, requires that our budget be balanced. This was unusual because the Governor still has quite a bit of time before the deadline to notify legislators of bills he plans to veto. And even if he didn’t line item veto the budget, he certainly has the authority to withhold funding for items in the budget given that some of the income on which the budget was based is not going to materialize.
So our Governor had a weekend meeting with this powerful senator and said, “Look, we need to invest in established state priorities, such as housing, homelessness, health care, and the environment, and here you have a $50 million project for first responders but our Honolulu Police Department, who ideally should be one of the prime users of this project, has said they don’t like it and won’t participate in it. So, that project is going to be line item vetoed. But we’ll find other ways to modernize the State’s emergency response facilities.”
The good Senator issued a statement recently saying that he understood where the Governor is coming from. Perhaps that means he is plotting revenge later but realizes he can’t do anything now. Could the Legislature override the veto of the budget bill? That would be extremely tough given that the Senate would need the House to vote to override as well. Further, even if the override did occur, the budget would then be out of balance, and the Governor could restrict funding for certain items at his discretion to make the budget balance. Thus, funding for the first responders’ center still would not happen.
In the meantime, the Governor is also taking sensible steps such as line item vetoing $500 million out of the $1 billion that the budget bill would add to our rainy day fund. Adding $1 billion to the fund, which sits in a bank somewhere waiting for an emergency to happen, would be questionable even if we had the spare cash given that we have current uses and needs for that money. Now, with the downbeat economic forecast, it’s questionable whether we even have the cash to spare.
Other significant proposed reductions include funding for teacher housing, reduced from $170 million to $50 million; boating and ocean recreation, with $60 million eliminated; water and irrigation infrastructure, from $94 million to $5 million; Iwilei/Kapalama transit oriented development infrastructure design and construction, from $86 million to $25 million; and Hawaii Green Infrastructure Authority solar energy storage loan program, from $100 million to $50 million.
Sometimes it takes a bad situation to make another bad situation better. This might be one of those times.
The 2023 Intent to Veto List
On June 23, Gov. Green issued his intent to veto list. Any bill that is now pending before him and not on the list will become law. Any bill that is on the list may or not be vetoed; the Governor has until July 11 to make a final decision.
None of the tax bills we have been following are on the list. But some very interesting bills are.
There’s House Bill 999. We mentioned that bill when we covered the State’s “shadow budget” last month because the budget included some $50 million for a first responders’ training facility in central Oahu that HPD and the House didn’t like, but the Senate slipped the millions in anyway. And, for good measure, the conference committee on that bill overhauled it to effectively kick one person, who happened to be critical of the first responders’ park, off the board of the High Technology Development Corporation that was tasked with building said park. The Governor wasn’t having any of this, however. This bill made the list because the proposed modifications to the Board were “too substantial.” And by the way, the Governor also gave notice of intent to line-item veto the $50 million appropriation. Bully for him! Revenge and retribution don’t properly have a place in moving our State forward.
Then there is Senate Bill 1518. It gives the Department of Education several procurement exemptions. Why? According to the bill’s preamble, the DOE is a big honkin’ department and doesn’t have time to be bogged down with such silly things as procurement laws. And, by the way, it says that the State’s electronic procurement system is “complicated and onerous,” placing a heavy burden on school administrators who need to comply with the law. The Governor’s answer? We have a system of procurement laws that is supposed to give us an open and transparent process. Carving out exceptions to it would decrease efficiency, create administrative burdens, limit competition, and open unfair advantages to certain vendors. In my book, I chalk up one point for the Governor and zero for cronyism.
Another interesting one is House Bill 475. That one would create a pilot program for monetizing art. The State, through a set-aside program administered by the State Foundation on Culture and the Arts, has a lot of very significant artwork. So, the bill proposes to loan out the art to private individuals, businesses, or entities – for “reasonable financial consideration.” That way, we make the art available for a lot more people to enjoy, and the State gets some money for it. Win-win situation, right? The Governor doesn’t think so. His veto rationale is that property bought with taxpayer money should be used for a public purpose, and the pilot program looks more like money-grubbing, which could get the State into all kinds of trouble such as compromising the State’s tax-exempt bond program, increasing debt service costs and tarnishing the State’s financial reputation. If there are technical, federal tax, and constitutional concerns about the bill, however, why didn’t someone from the Attorney General’s office make them known in testimony? This bill’s history makes me worried that someone has been sandbagging.
And last but not least, there is Senate Bill 945, relating to special purpose digital currency licensure. It would have Hawaii start to regulate cryptocurrency. The 80+ page bill contains a lot of words but no money for DCCA to turn those words into action, as the Governor’. Clearly, if Hawaii wants to play in this space it needs to put some money where its mouth is.
The Governor’s intent to veto list is here, where you can see descriptions of some of the other bills that made the list – eleven on this list plus the State budget bill for which the Governor has proposed line-item vetoes.