Sunday | September 24, 2017
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State lawmakers pass $28B budget amid fear of federal funding cuts

HONOLULU — State lawmakers passed a $28 billion two-year budget at a time when state revenue projections are falling and there’s fear of potential cuts in federal funding to Hawaii.

“The financial picture did not look as rosy and robust as had been portrayed,” said House Finance Committee Chairwoman Sylvia Luke before the House approved the spending bill Wednesday.

The state’s tax collections in recent months have not grown compared to last year, and state economists reduced their revenue projections by $1 billion since Gov. David Ige submitted his budget in December, Luke said.

Overall, the House cut about $500 million from the governor’s proposed two-year budget and the Senate, which takes up the bill next, will have to cut even further, Luke said.

One of the biggest cuts the House made was to the amount that the state will pay to fund health care and other benefits that it has promised to public employees after they retire. Ige proposed spending $211 million on those retiree benefits in the next two years, attempting to speed up the rate that the state catches up in setting aside full funding to pay those promised benefits in the future. But the House decreased that budget by $74 million, Luke said.

“We’re just trying to make sure we do the prudent things to not burden future generations,” said Wes Machida, director of finance for Hawaii.

The state receives about $3 billion a year from federal sources, which is 20 percent its budget.

“We’re watching the federal funds closely,” Luke said, adding that she’s concerned about potential cuts in federal funding to the Department of Land and Natural Resources and the state’s Medicaid and Medicare programs.

Ige’s proposed budget included $5.6 billion in Medicaid spending over two years.

The biggest recipients of federal funds in Hawaii are the Department of Human Services, which administers Medicaid, the University of Hawaii, Department of Education and Department of Health. It’s unclear whether federal funding will be cut for programs in those departments, Machida said.

“If those programs must be continued, then we have to find ways of supporting that if possible with general fund moneys, and we don’t have that as of this point,” Machida said.

Republican Rep. Gene Ward told colleagues before the vote he’s heard murmurings about planned federal cuts and cautioned the state should not assume that it will get 20 percent of its funds from the federal government as a guarantee.

“Assumption is the lowest form of information,” Ward said.

 

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