State facing massive projected budget shortfalls, increasing to $6.4 billion in 2026

Coronavirus

HONOLULU (KHON2) — Governor David Ige warned the state of Hawaii Monday that there is a budget shortfall of $2.3 billion looming in the fiscal year 2021, but projections forward are more daunting.

The state has maneuvered resources to cut that $2.3 billion to $133 million through a $900 million loan from the United States Treasury, as well as a near-depletion of the $182.4 million Hawaii Hurricane Relief Fund.

“We’ve initiated that activity,” Governor Ige said. “So we’ll be borrowing from the U.S. Treasury that certainly the challenge with borrowing those funds is the term is limited to three years so whatever we borrow would have to be repaid.”

Hiring freezes would also be implemented to save salaries, but pay cuts and furloughs could follow.

“That’s kind of the next level of activity and then the last part of the budget puzzle will be salary savings or payroll savings,” Ige said.

To get on budget in the future the state is looking at a deficit of $1.2 billion in 2022 with a billion added onto every year until $6.4 billion in 2026.

Senate Ways and Means Committee Chair Donovan Dela Cruz said the economy outside of tourism has to create revenue.

“It’s going to be all hands on deck to make sure that we can make this work but we got to get the economy moving with other non-tourism sectors so we can get revenues up,” said Dela Cruz.

That could increase income and general excise tax revenue, some of which the state had already began before COVID-19 with construction.

Dela Cruz thinks projects will prop up the economy to create revenue.

“We put a lot of money in construction,” said Dela Cruz. “A lot of money, so getting the Aloha Stadium starting to get built, all of the other construction projects that we’ve been getting are going to get the economy moving.”

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