Gov. Josh Green on Friday defended his decision to cut $1.1 billion from the 2024-25 state budget.
“We reduced the budget by a billion dollars, because we have to do that constitutionally,” Green said during a livestream interview with the Honolulu Star-Advertiser, citing a need to balance the budget after the Council on Revenues lowered its projection for state tax revenue.
In March, the council anticipated revenue growth of 2%, but by May, that changed to a forecasted loss of 1%.
“I’m making these cuts now instead of delaying for two years and leaving uncertainty,” Green said, adding the Legislature will have a chance to override them. “A lot of times, a governor would let a budget go through and then decide a year from now whether they were going to release that money to this district or that district, this program or that program.
“I was just being straight, saying we can’t spend that money, let’s balance the budget, keep our bond rating very good so that our debt is low, so that our interest rates are low, and then next year, when we see how much money we have, the Legislature can come back with priorities.”
Green’s line-item vetoes, which he announced Wednesday, will reduce funding from 22 different projects and departments, bringing the new biennium budget total to $20.6 billion.
Cuts to projects are mainly Oahu-centric, but include a reduction of $88.8 million from irrigation infrastructure in 2024, $120 million from a teacher housing project in 2024, and $60.2 million from the Department of Land and Natural Resources Division of Boating and Ocean Recreation in 2024.
The largest cut was $500 million in 2025 from the Emergency Budget Reserve Fund, known as the state’s rainy day fund.
“Instead of putting a full billion dollars into the rainy day fund, we’re putting $500 million dollars, and honestly, no one’s going to be able to tell the difference,” Green said.
Even with the reduction, the Emergency Budget Reserve Fund will hold $1.5 billion in 2024.
“That’s 15% of our operating budget and a huge amount of money in case, God forbid, we were ever hit with a bad hurricane or another disaster,” Green said. “None of it was hard to cut, because I did have some flexibility to make sure we filled in hot spots like funding for education.”
That flexibility came from a $200 million discretionary fund given to Green by the Legislature.
“I’ll be spending $55 million on the Department of Education, $71 million on the Hawaii Tourism Authority, and $25 million on the (University of Hawaii),” Green said of the $200 million. “That’s my tentative plan right now, and that money will help restore the pukas in the budget that people were worried about.”
But some concerns remain over education funding.
The Legislature’s operating budget for public schools is $57.1 million less than what Green requested for fiscal year 2023-24, and $109.7 million less than what was requested for 2024-25.
Schools also are set to receive $434.2 million less than the Board of Education’s approved request of $536.1 million for 2024, and $479 million less than a slightly higher request for 2025.
BOE Chair Bruce Voss opted to step down after a conversation with Green.
“I’m not blaming them, I’m just saying the (BOE) obviously didn’t have a great relationship with some of the leadership at the Legislature, and that’s what happens,” Green said. “I really do appreciate what the current board chair has done. I offered to keep him on. He made the choice to leave. I don’t begrudge anybody leaving early if that’s their choice in life.”
Voss expressed his concern over the cuts and the impact they might have on the board’s six-year strategic plan, calling the cuts “puzzling and disappointing.”
Warren Haruki, retired Maui Land and Pine CEO and former president of Hawaiian Tel and Verizon, will be taking over as interim board chair on July 1.
Brian Hallett, chief financial officer in the DOE’s Office of Fiscal Services, said the DOE will cope with the budget shortfalls by possibly delaying implementation of some initiatives, scaling back some services or programs, securing alternate sources of funding like federal funds, and requesting emergency appropriations in the 2024 Legislature.
No employee layoffs are expected at this time, according to Lynn Fallin, chair of the BOE Finance and Infrastructure Committee.
Tribune News Service contributed to this story. Email Grant Phillips at gphillips@hawaiitribune-herald.com