Lawmakers reach agreement on new two-year state budget


The major pieces of the state budget for the next two years are falling into place, with House and Senate lawmakers earmarking state and federal funds that will be used to pay back more money. $ 1 billion borrowed by the state during the pandemic.

Earlier this year, Gov. David Ige and members of the Legislature feared they would be forced to make deep budget cuts and slash social services, but an infusion of more than $ 1.6 billion in Federal funding from the US federal bailout law has informed lawmakers’ perspectives. considerably.

House and Senate negotiators announced on Monday that they had reached agreement on a new budget for the two years starting July 1 and will now send the spending plan House Bill 200 upstairs in each bedroom for the final votes next week.

House Finance Speaker Sylvia Luke and Ways and Means Senate Speaker Donovan Dela Cruz, center, in 2019. Lawmakers say the new budget does not require any tax increases, but they are considering always possible increases in state transfers, capital gains and property taxes. Cory Lum / Civil beat

Lawmakers provided relatively few details on the latest budget document, but House Finance Speaker Sylvia Luke said the new project included more than $ 313 million to repay part of the $ 750 million borrowed by Ige last year to help cover the costs of running the state as tax collections plummeted.

Ways and Means Senate Speaker Donovan Dela Cruz told colleagues that an additional $ 705 million in federal funds would be used over the next two years to repay money the state borrowed from the federal government to cover the cost of unemployment benefits for the unemployed.

Technically, this debt is the responsibility of Hawaii employers, who are required to pay unemployment taxes to fund the public unemployment insurance system.

However, House and Senate lawmakers argue the state should repay the federal loan, as it was the state that shut down tourism to Hawaii last year to slow the spread of COVID-19. Ige said he agreed.

Ige initially planned for layoffs and leave of officials to meet the state’s budget deficit, and proposed a budget in December that established budget cuts for state departments ranging from 5% to 20% in some. case.

However, lawmakers said on Monday that there were no scheduled holidays or layoffs. The additional injection of federal funding and raids on state “special funds” have reversed most of the cuts proposed by Ige.

Special funds are accounts that have their own dedicated sources of income which are normally reserved for specific purposes. When lawmakers plunder these funds, they strip it and use it to balance the state budget.

Luke said on Monday that House bill 1298 will sweep more than $ 100 million from a variety of special funds in the general treasury.

Dela Cruz said the budget approved by the House and Senate conference committees on Monday was not based on any tax increases, but lawmakers are still considering some tax increases.

Conference committees are scheduled to meet Tuesday morning to discuss Bill 133, which would increase the state capital gains tax.

Lawmakers are also expected to meet later this week House bill 58, which would increase both Hawaii’s estate tax and transfer tax on the sale of properties valued at over $ 4 million.

Del Cruz said he hoped to use the proceeds from these tax increases to replenish the state’s budget reserve or the rainy days fund, which the Ige administration drained last year as the pandemic s ‘installed.

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