A $1 billion allocation to the state’s emergency fund proposed by Gov. David Ige might end up smaller than he hoped as it faces resistance in the Legislature.
When Ige revealed his proposed budget in December, he suggested a $1 billion appropriation of state revenue to the Emergency and Budget Reserve Fund, commonly called the “rainy day fund,” to refill its coffers after expenses made during the COVID-19 pandemic.
This legislative session, two bills were introduced to execute that appropriation. However, one of those bills is dead and the other one has had all references to “$1 billion” scrubbed from its text.
As it stands now, Senate Bill 3074 would appropriate an unspecified sum to the rainy day fund. Although the bill also says that the appropriation would bring the fund’s balance to about 14.7% of last year’s general fund revenues, this is a holdover from the bill’s previous draft.
Oahu Rep. Sylvia Luke, chair of the House Finance Committee, said she is uncomfortable with the thought of allocating so much money to the rainy day fund instead of more pressing concerns. House Bill 2106, the companion bill to SB 3074, was deferred by Luke’s committee in February.
“Right now, we have commitments for things like housing with the (Department of Hawaiian Home Lands),” Luke said. “There’s other things we could use that billion dollars for right now.”
The Tax Foundation of Hawaii, one of only two organizations to provide testimony about the bill, also questioned the proposal.
“We question why so much is being squirreled away … as opposed to addressing the needs we now have and could not deal with previously such as deferred maintenance across the state, at the airports, and so on,” the Tax Foundation wrote in February.
The text of the bill justifies the scope of the allocation by noting the extensive support provided by the federal government during the pandemic and lists a series of potential future crises, including climate change, tensions with China and Russia, and “growing polarization of political viewpoints in the United States.” The bill says the state must be prepared to deal with these issues on its own if the federal government cannot provide support.
However, Luke said she is willing to hear discussion about SB 3074 to determine just how big an allocation can be allowed.
“It is good practice for us to put something into the rainy day fund,” Luke said, adding that, over the past several years, she has pushed to get about $400 million into the fund’s reserves.
Currently, the fund has about $350 million.
A statement from Ige’s office indicates that the governor is still optimistic that he will get the billion dollars he requested.
“…We have the resources to take care of both our immediate and long-term needs, and it’s important to prepare now for another catastrophic emergency,” read the statement to the Tribune-Herald. “One important consideration is that bond agencies look upon these rainy day funds as an indication of the solvency and financial strength of the state. Replenishing the fund now could save the state millions in interest payments later.
“We’re only at the halfway point in the Legislative session, and the governor is hopeful that the requested funds will be allocated,” the statement concluded.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.