Helton, Hamada run through the numbers of state, Maui budgets

4-25-24 Jonathan Helton on Rick Hamada on KHVH News Radio 830

Rick Hamada: We are together with Jonathan Helton, Grassroot Institute of Hawaii. Jonathan, it’s good to hear from you. Good morning.

Jonathan Helton: Good morning, Rick. It’s good to be on the show.

Hamada: Would you mind a brief reintroduction to our friends who were dialed in, please?

Helton: Of course. My name is Jonathan and I cover a lot of the policy research at the Grassroot Institute. I’m on the back end for a lot of our work. I’ve written reports on property taxes and housing, and I’m leading a lot of our research into what’s going on in Lahaina. So, a lot of reading government reports.

Hamada: We appreciate it because today is a day of statistical conversation, especially in two counts. One is the financial funding that has been directed to Maui in all quadrants, and of course, the upcoming close of this legislative session.

If we could start with the Leg, Jonathan, the budget was finalized and now, of course, conference can move forward knowing that the monies are quote-unquote fair. 

What’s going on with our state budget?

Helton: Yes, so the state budget will be up for final reading tomorrow. So the full House and the full Senate will vote on it, and kind of at a high level. This year’s budget includes $19 billion in spending and that’s a $1 billion increase over what was projected last year. So that’s where we’re at.

The Lahaina funds, which we can get to that in a minute, they’re mostly in other bills. Most of those funds were not in the primary budget.

Hamada: It’s interesting because whenever we talk about financial appropriation, many of us, the public just goes, “Well, that’s part of the budget.” But as you just stated, there are separate financial instruments that are utilized. How can there be monies delivered if it’s not derived out of our budget?

Helton: Yes. So the budget primarily provides funding for a lot of your existing state agencies, existing positions.

A lot of the times what lawmakers will do, if there’s a new program they want to create — especially if that program would involve the creation of new language in the law — what they’ll put that language in a different bill. And then they’ll appropriate funds through that bill.

So that’s what we’re seeing with Lahaina. And a lot of bills last year, I remember looking at one bill that created a council to study something about reducing the access to your population on Maui. And that little bill had an appropriation in there that wasn’t in the state budget.

Hamada: Jonathan Helton joining us today, Grassroot Institute of Hawaii. 

So if we take a look at the budget, what is the lion’s share of appropriations therein? For instance, our debt service in the state budget. Jonathan, do we have a number for that and could you share others?

Helton: I don’t have a number off the top of my head for debt service, but this year is very similar to past years. About a half of the state budget goes to fixed costs. 

That includes debt, your debt coverage payments, your pension payments, and some of your healthcare-related payments for state employees. All of those are things that lawmakers don’t really have a lot of control over, and that has consistently been half of the state budget for the past several years.

Hamada: If we look at our annual state budget, how much is it?

Helton: It’s going to be $19 billion this year, which is — if you remember, the budget works on a two-year cycle, so last year, they passed a budget and they also predict funding for the year to come. And so they said that the budget for this upcoming year was probably going to be $18 billion. 

But with Lahaina and just spending as it just tends to grow, lawmakers have added an additional billion dollars.

Hamada: Thank you for reaffirming that number. I want folks to really kind of absorb the amount of monies that we’re talking about.

Final on this. When we talk about the state budget, is it purely, solely and absolutely state funds or are there federal monies involved with our state budget calculation?

Helton: Yes, it’s a combination of both. So, there’s usually two big components to the budget.

First, you have the general fund, which is where your income tax revenue, a lot of your GET revenue, some of your transient accommodation revenue,that all goes to the general Fund. The general fund this year is just over $10 billion.

So the remainder of that is going to be federal funds and fees that the state might receive from, like, your business license or if you need to pay a license to become a licensed plumber. 

Those will all go into various special funds that would support, if it’s a plumbing license, maybe the operations of whichever department enforces that.

Hamada: Is there a separate number for CIP?

Helton: Yes, and let me see if I can get that real quick. I don’t have the CIP number off the top of my head, but it may be included in that other $9 billion.

Hamada: Gotcha, Gotcha. Once again with Jonathan Helton. 

Jonathan, what about the Maui budget?

Helton: Yes. So talking about the Maui County budget — and we can come back to all of the Lahaina funding in the state budget — but the Maui County budget is looking at about a 40% increase in spending over last year, and a lot of that spending is what the county is appropriating for Lahaina.

Some top level numbers: The mayor’s office said that about $146 million is going to be appropriated for wildfire-related spending. 

And some of the big things there, the county’s Office of Recovery that’s helping to coordinate your housing project, that’s going to get $90 million in the budget that the Council is debating right now.

And then there’s also a lot of money in the county budget. They’re budgeting at least $337 million for capital improvements that are related to wildfire recovery. There’s a whole laundry list of probably, you know, two dozen items that they’re, that’s going to be funded as a part of that top level number.

Hamada: There was a last-minute request from Mayor [Richard] Bissen to the state. I understand that that amount was originally $150 million, maybe it’s been reduced. But according to the Legislature, “No, we will go half of that amount in the form of a loan.” 

Do we know the status of where that is in the big square building now?

Helton: Yes. So I’ll just take a step back for a minute. 

Hamada: Sure:

Helton: There’s two major bills that provide funding for the state for Lahaina-related assistance.

So we’ll talk about this bill first. This bill is Senate Bill 3068, and it’s budgeting money for next year — the fiscal year that will start in July. This bill contains money for that.

Right now it’s $460 million. And so you’ve got four components there, and one of those components is the money that the state is planning to loan to Maui County.

In the latest draft of the bill — and keep in mind this hasn’t been passed out of conference committee, this will probably change, it might change this afternoon — but right now it’s $63.5 million. And that’s the loan that they want to give to Maui County.

Hamada: I see.

Helton: Now, earlier this, or I guess last week, Mayor Bissen has asked for essentially double that. Will he get it? We don’t know yet. And that’s all being hashed out.

But that’s one of the things that that bill does, and it appropriates about $400 million on three other items, which if you’d like to, we can get into those.

Hamada: Yes, a matter of fact, reminding that Jonathan Helton is with us. Jonathan, how do we connect with Grassroot Institute?

Helton: Sure. So the easiest way is to just visit our website, which is grassroot (no “s:) dot org. You’ll see all of our testimonies, our columns, our reports, all of that.

Hamada: Definitely visit and visit every day. 

So if we could have a breakdown, I am always curious in the various — in the four different areas — the aggregate number of monies that have been either appropriated or encumbered in the name of Lahaina.

Could we start with federal monies, please, Jonathan? As of today, how much federal monies have been earmarked or even distributed for Lahaina?

Helton: The most recent figure that I found on this was from the state budget documents, and they said that FEMA has been authorized to spend $2 billion on Lahaina cleanup and recovery and housing and their mission on Maui.

Now that’s what the Legislature has said. Back in February, FEMA said it had already spent $1.7 billion on debris removal, on housing assistance, on building the Kamehameha Schools temporary campus, on raising boats out of Lahaina Harbor — so all of these different things that FEMA and various agencies are doing. And back in February that was about $1.7 billion. 

So the total is probably somewhere higher than $2 billion, but that’s the most recent number that we know.

Hamada: May we request state monies that have been the same for Lahaina?

Helton: Yes. So in terms of state money, let’s look at this fiscal year — so from last July to the upcoming June 2024.

Right after the fire, the governor moved some money around in the state budget to provide assistance. A lot of that went toward housing.That ended up being almost $200 million that was moved around in the state budget. 

And so what the Legislature is doing now, now they’re considering additional bills to provide funding for the existing year and for next year.

So we kind of talked about the bill that would provide funding for next year. That’s $460 million right now. So the bill that’s going to provide funding for this year, the amount is even bigger.

So, right now, with the numbers that are in the bill — again, keeping in mind that it will probably change in the next couple of days — it’s just over $1 billion. And, I mean, that’s, you know, that is a, that’s a lot of money.

Half of that right now is going to be earmarked for the non-congregate housing. So the state paying to keep people right now in the hotel. That’s going to take about half the money.

Hamada: Oh my goodness.

Helton: And then you’ve got another $120 million there that’s also dedicated for housing. 

And the rest you’ve got — you’ve got funds for what the state might have to pay for cleanup costs. 

You’ve got this kind of more general one that’s about $200 million for FEMA-ineligible state expenses. So, if the state is doing something on Maui — providing food, helping with housing assistance, whatever they’re doing — not all of that FEMA is going to reimburse to the state. It’s kind of trying to cover its bases now.

And then the final thing in this bill is an appropriation for the Lahaina Ohana fund which is the compensation fund for victims who choose not to litigate but instead to take a payout. So the state’s putting in $65 million to that.

Hamada: $65 million. Is the bill that would effectuate a surcharge on our electric bills with HECO — I believe it was a 5% surcharge — is that still alive as well?

Helton: Yes, to my knowledge it is. It is not something that deals with any state money that I know of though.

Hamada: OK, I know that we’re coming right up to the top of the hour, I want to thank you for this Jonathan. 

Local county monies, you did cover the requests and the amounts that are on the table with the counties. Can I go directly, with time, private sector monies, donations in the name of Lahaina. Do we have any numbers there, please?

Helton: Yes. So back in, I would say, February or March, we had a commitment from several of these private parties to put money into the Lahaina Ohana Fund. The biggest contributor to that fund is going to be HECO. They’re going to be putting in $75 million.

And then you have Kamehameha Schools, Charter, Hawaiian Telcom, West Maui Land — they’re all going to be putting in a little bit to that fund, which will total $175 million.

Some of the other big things we have — if you remember all the way back to January, the state, FEMA, the county, they came out with a housing plan, which, you know, that’s a whole other topic, but the housing isn’t there. But they had a housing plan to spend $500 million.

And so, for that money, you had Hawaii Community Foundation, you had CNHA [Council for Native Hawaiian Advancement], and some other philanthropy providing about $60 million there.

And then you’ve also got — you’ve got more funding. In total, Hawaii Community Foundation has provided close to $100 million through Maui Strong to the county.

And then you have the news from earlier this week that the Entertainment Industry Foundation — which a lot of that money is from Dwayne Johnson and Oprah Winfrey — has provided $60 million to Maui. 

So those are some of the major donors on the private side.

Hamada: I want to thank you for the data and in a subsequent program I’d like to go over so where is it all …

Helton: Yeah.

Hamada: … and can have that conversation at a later time.

In the remaining two minutes that we have, I’d like to turn it over to you, Jonathan. And in two minutes, what would you like to share as we leave this Thursday?

Helton: I’d share two things. There are two bills related to tax that are really significant.

Number one, there’s an income tax relief bill that’s still alive, HB 2404. That’s going to cost the state just over $100 million if it passes in its current draft.

So, you know, $19 billion state budget, $100 million tax relief — really not that huge, but the bill would be very important. It increases the standard deduction, indexes the tax system to inflation, so whenever anyone gets a raise, you know, with this, that raise would be protected from higher taxes. That’s big.

The other big one, GET exemption for medical services, still alive. Only a $50 million cost to the state. So again, not a ton of money in the grand picture. But it would be really important for keeping Hawaii’s doctors in business and recruiting new physicians to come here. 

So two tax bills that are still alive and really important.

Hamada: I can’t thank you, Jonathan, enough for the information. I hope we can connect soon. And I want to wish you all the very best. Thank you.

Helton: Absolutely, Rick. Happy to be here. Thank you.

Hamada: Thank you very much, Jonathan Helton, Grassroot Institute of Hawaii.

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