Ige Shelves $230 Million in State Unemployment Aid, Vetoes Other Items in State Budget Bill

Governor David Ige will sign the state’s budget bill into law, with some notable omissions.

The governor made eight line-item vetoes before signing Senate Bill 126 into law, many of which involve the allocation of federal CARES Act funding granted to help people and businesses survive the economic plight brought down on Hawai‘i by the COVID-19 pandemic.

Notably, Ige cut all $230 million meant to add an extra $100 weekly to every unemployment insurance check cut by the state’s Department of Labor and Industrial Relations. Federal plus-up funding that added $600 to each UI weekly benefit expires Friday and Congress has yet to approve a new stimulus package.

“It seems like there will be an agreement reached in the next week or so, or (if not) it will be most likely that no agreement will be met,” Ige said of stimulus discussions in Washington. “Our plan is to wait until the August recess in about a week or so. If there is no agreement reached before the August recess, then we would look to implement our state-only UI program.”

Hawai‘i House Speaker Scott Saiki criticized the governor’s decision Thursday afternoon.

“I am disappointed that the governor has decided to veto additional UI benefits for our unemployed residents,” Saiki said. “The current federal plus-up of $600 per week will expire on July 31. Unemployed residents cannot wait for Congress to act, if it acts at all.”

Ige said UI benefits will be supplemented one way or another, but by vetoing the money now, it allows the state more flexibility to use it elsewhere in the future. All CARES Act funding must be spent by the end of the year, and it can not be used to supplement previously existing programs or for any purpose other than direct aid for problems connected to the arrival of coronavirus on Hawaiian shores. Hawai‘i has spent roughly 10% of the federal funding it’s received, which ranks 26th out of 50 US states.

The governor also mentioned employers across the state who’ve voiced concern that they can’t get employees to return to their former positions because those employees now make more money through unemployment benefits than they did when gainfully employed. It’s a problem at the center of a debate in Washington between competing stimulus packages.

House Democrats passed the HEROES Act months ago, which would continue the plus-up funding of $600 weekly through the end of the year. Senate Republicans released their proposal in recent days, which would supply $200 in weekly funding for two months, then adjust benefits to guarantee people receive at least 70% of what they were making prior to coronavirus-related furloughs.

Both plans include an extension of the Paycheck Protection Program, which will help keep small businesses afloat in Hawai‘i, as Ige said he continues to consider reopening the state’s borders to unimpeded trans-Pacific travel on Sept. 1.

The governor also said Thursday that layoffs or pay cuts to state employees — a category that includes nurses, teachers, and frontline COVID-19 responders — remain a real possibility as the state tries to navigate a budget shortfall expected to be in the several billion-dollar range.

“We definitely have a budget crisis that we need to work through,” Ige said. “We are monitoring and advocating for additional support from the federal government. We need significant federal support to avoid layoffs or pay reductions for public employees.”

The governor’s office sent out a press release detailing each of his line-item vetoes with an attached rationalization. Beyond eliminating state-sponsored UI benefits, for the time being, the governor also included significant cuts to funding for rental assistance and the procurement of personal protective equipment (PPE) allocated by the State Legislature in its final draft of the budget bill.

Ige’s full line-item veto list reads as follows:

1) Decreased from $90M to $70M, the appropriation out of the Emergency and Budget Reserve Fund for airport screening and health assurance security initiatives.

Rationale: The Department of Transportation believes, and I agree, that $70M will be sufficient for equipment and services to test, verify and monitor travelers, and for other health assurance security initiatives as needed.

2) Decreased from $230M to 0, the appropriation out of the Emergency and Budget Reserve Fund to provide an additional weekly unemployment benefit of $100 per week to state eligible recipients.

Rationale: The US Congress is negotiating another economic stimulus package. Since the package is not yet clear, and because I must act now – I must line-item veto this appropriation. The most effective use of these funds to support the needs of the community will be determined once Congress has acted.

3) Decreased the $100M appropriation out of the Emergency and Budget Reserve Fund to $50M for housing and rental assistance and administrative costs related to the housing relief and resiliency program.

Rationale: The Hawai‘i Housing Finance and Development Corporation (HHFDC) believes, and I agree, that an initial working capital of $50M is sufficient to start a program from now until the end of the year. It will help renters and homeowners who have experienced a reduction in income because of unemployment or reduction in work hours due to COVID-19. If additional funding is needed beyond the initial working capital amount, it will be provided at a later date.

For example, the bill only provides benefits from Aug. 1 through the end of the year. Funds saved by the reduction may be applied to the period March 1 through Aug. 1.

4) Decreased the $100M appropriation out of the Emergency Budget and Reserve Fund to $61M for the purchase and distribution of personal protective equipment (PPE) to hospitals, childcare facilities, elderly care facilities, businesses, non-profits, and schools.

Rationale: The appropriation does not include the purchase and distribution of sanitation or disinfectant supplies. The Department of Defense believes, and I agree, that $61M is sufficient for the purchase and distribution of PPE to eligible organizations. The remaining funds will be used to purchase and distribute sanitation and disinfectant supplies.

5) Decreased the $36M appropriation out of the Emergency Budget and Reserve Fund to $10M for retraining and workforce development programs.

Rationale: According to the Department of Business, Economic Development, and Tourism’s business plan, $10M is sufficient to launch workforce retraining programs for individuals impacted by COVID-19. Additional funding will be provided as needed.

6) Decreased the $15M appropriation out of the Emergency and Budget Reserve Fund to $10M to support emerging industries to create a supply chain for cleaning supplies and PPE.

Rationale: The Hawai‘i Technology Development Corporation believes, and I agree, that $10M is sufficient to provide start-up funding to businesses in this emerging industry. An additional $5M may be available later.

7) Decreased the $2M appropriation out of the Emergency and Budget Reserve Fund to $1M for a public-private partnership (PPP) to provide support to public high school seniors who were adversely affected by school closures in their final semester of school.

Rationale: An initial working capital of $1M is adequate to begin establishing these programs. As they become successful, additional funds may be provided.

8) Decreased the $1,080,000,605appropriation out of the Emergency and Budget Reserve Fund to $648M for deposit into the general fund.

Rationale: I understand that, of the $1,080,000,605 appropriated for deposit into the general fund, $432,000,605 of that amount represents fiscal biennium 2019-2021 general fund appropriation reductions. A general fund appropriation reduction does not represent cash – it represents reduced spending authority. Consequently, this appropriation is overstated by $432,000,605.

As is the normal process, the governor returned the unsigned bill, with line-item vetoes, to the House and Senate Thursday. He will sign SB 126 with the line-item vetoes and submit the bill to the Legislature Friday.

The governor’s vetoes can be overridden by a two-thirds majority vote in both the State House and Senate.