The following commentary was published originally in the Hawaii Filipino Chronicle on May 20, 2023,
The chaos that typically characterizes the final days of a Hawaii legislative session this year produced a state budget that exceeds the constitutionally mandated spending limit by 10%.
Gov. Josh Green’s proposed budget would have exceeded the state’s legal spending limit by about 6%. But the Legislature added $668 million more to the bill, bringing the total proposed executive branch general fund budget to $11.2 billion — or $1.06 billion in excess of the state’s spending cap.
The upshot is that unless we can persuade Gov. Josh Green to use his line-item veto power to shed some or all of that proposed excess spending, the state is unlikely to have the $10 billion budget surplus in 2028 that so many analysts had been projecting just a few months ago. Instead, it will have a $45 million deficit, which would be bad news for Hawaii taxpayers and Hawaii’s economy as well.
So what the heck happened? How did the state’s spending plans balloon virtually overnight — and why does this mean the state’s budget surplus is likely to vanish?
The main reason our lawmakers went on a spending spree is because they could. Delegates to the 1978 Constitutional Convention mandated that state spending shall not grow faster than the three-year average of Hawaii’s personal income growth. But it also allowed legislators to override that limit by a two-thirds vote of both the House and the Senate.
Considering that Hawaii is virtually a one-party state these days, a two-thirds vote has become a pretty low bar. However, even most of the legislators in the minority party went along with the deal, and of the handful of legislators who voted against the bloated budget, most of them did so on the grounds that the state should be spending even more. Meanwhile, projected tax revenues for the state have been falling because of economic uncertainty — and when spending grows and revenues shrink, surpluses disappear.
So while it might seem like “Happy days are here again” at the Legislature, the sobering reality for Hawaii residents is that lawmakers will need to either increase our taxes or take on more debt if this high level of spending keeps up. Both options would end up adding to Hawaii’s cost of living — leading to more homelessness, unemployment and migration of Hawaii residents to the mainland. Thankfully, there is a simple solution, although it requires discipline: Stick to the spending limit.
According to the Committee on Taxation and Finance at the 1978 Constitutional Convention, the state spending cap was put in place in response to “the genuine concern of taxpayers that the costs of government should not consume an increasing proportion of their income.”
Today’s lawmakers should recognize the wisdom of those ConCon delegates and rein in their penchant for spending. Showering money on favored constituents can be politically popular in the short-run, but it shows a lack of leadership in the long run in terms of ensuring a healthy and prosperous future for Hawaii. Now that the Legislature’s budget bill has passed, we can only hope that Gov. Green will use his line-item veto power to pare it back to a more reasonable level before signing it into law.
The success of future generations depends on the decisions made today, so let’s not saddle our children with higher taxes and debts to pay for today’s excess.