David Y. Ige

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HONOLULU – Gov. David Ige has notified legislative leaders and key lawmakers of his intent to veto 28 out of 268 bills passed during the 2021 Hawai‘i legislative session. A complete list of bills on the Intent to Veto List is attached.

“The state’s economic position has significantly brightened since the beginning of the legislative session, and we no longer need to take some of the extraordinary revenue actions proposed,” said Gov. Ige.

Gov. Ige noted two specific reasons for the improved economic position:

• First, the Coronavirus Response and Relief Supplemental Appropriations Act of 2020 and American Rescue Plan Act of 2021 (ARPA) provide substantial federal funding to address a range of pandemic-related state costs. They include nearly $600 million for the Department of Education and $1.64 billion of general-purpose funding to mitigate state revenue losses and increased COVID-related expenses.
• Second, the Council on Revenues has met three times since the FB 2021-23 Executive Biennium Budget and Financial Plan were presented to the Legislature in December 2020. It increased its general fund revenue projections for fiscal years 2021 through 2027 by a total of $6.1 billion over this seven-year period.

Gov. Ige also cited federal guidelines that were issued on May 1, 2021 for the use of ARPA funds as another reason some measures are on the Intent to Veto List.

“New guidance from the federal government clearly states that rescue funds cannot be used for debt service, and this created a gap in the budget that must be corrected,” said Gov. Ige.

HB54 HD1 SD1 CD1 – Relating to the State Budget

 

This bill appropriates general funds and federal stimulus funds to the Department of Budget and Finance to cover fixed costs and replenish the State’s rainy-day fund.

 

RATIONALE: The federal stimulus funds appropriated in this bill for debt service are not an allowable use of ARPA Coronavirus State Fiscal Recovery Fund (CSFRF) funds.

“I support the Legislature’s intent to replenish the emergency fund to fix essential debt service appropriations,” said Gov. Ige.

HB200 HD1, SD1, CD1 – Relating to the State Budget

This bill makes appropriations and fund authorizations for the Executive Branch in FB 2021-23.

RATIONALE: The ARPA restricts states from using Coronavirus State Fiscal Recovery Fund (CSFRF) monies for:

• General obligation bond debt service. HB200 appropriates $160 million in FY22 and $153.7 million in FY23 of CSFRF for this purpose.
• Programs that have federal fund matching requirements. HB200 appropriates $134,000 in FY22 and $1.1 million in FY23 of CSFRF for this purpose.

Only these items will be line-item vetoed. All other legislative appropriations in HB200 will remain.

HB613 HD2 SD2 CD2 – Relating to Education

 

This bill seeks to appropriate federal funds from the Coronavirus Response and Relief Supplemental Appropriation and the ARPA for the purposes of conducting various education related services. The bill also requires the Dept. of Education to seek legislative approval to make any adjustments to the appropriations made in each category specified in the bill.

 

RATIONALE: According to guidance issued by the U.S. Dept. of Education, state legislatures do not have the ability to limit a local education agency’s use of funds appropriated through the CARES Act or ARPA. For federal purposes, the Hawaiʻi Department of Education (HIDOE) is considered both a state education agency, as well as a local education agency. The proscriptive limits on spending for each service category outlined in the bill, effectively limit HIDOE’s ability to allocate funds under current federal guidance.

 

Additionally, the federal government requires a local education agency using ARPA funds to develop a spending plan that incorporates “meaningful consultation” with community stakeholders, including teachers, principals students, school staff, unions, civil rights organizations, English learners, and various other groups. The spending plan outlined in HB613 was developed during conference committee and it is unclear whether any meaningful community consultation occurred. This lack of a transparent and open consultation process further puts the state and Department of Education at risk of being in violation of federal guidance.

 

“The appropriations made in this bill do not comply with federal guidance for spending and put the state at risk of being in violation of federal rules, which could require the return of the funds,” said Gov. Ige.

Other bills on the governor’s Intent to Veto List were deemed objectionable because of concerns about legality, practicality of implementation and/or lack of transparency.

HB862 HD2 SD2 CD1 – Relating to State Government

 

This measure makes significant funding and functional changes to the Transient Accommodations Tax (TAT) and the Hawaiʻi Tourism Authority (HTA).

 

RATIONALE:

• Using ARPA appropriations makes funding less predictable and adds potential inefficiencies.
• An added 3% county TAT represents a significant increase that could have a major impact on Hawaiʻi’s nascent economic recovery.
• Coupled with HB200, HB862 would limit operational funding for the Hawaiʻi Convention Center (HCC) to no more than $11 million, which is only 20% of the $54.1 million requested in the Administration’s Executive Biennium Budget based on projections from interest received. Such extremely low funding would severely restrict the HCC from attracting additional events and fulfilling its mission.

 

“I am very concerned that the funding and functional changes in this bill will severely damage HTA’s shift to destination management. We need to find ways to mitigate the impact of visitors on our islands, and this bill would make it impossible for the HTA to strike a more sustainable balance in our communities,” said Gov. Ige.

All measures on the Intent to Veto List are subject to veto, but inclusion on the list does not indicate that the governor will veto a bill. The public is urged to make comments on legislation at: https://governorige.hawaii.gov/contact-us/comments-on-legislation/.

Gov. Ige has until July 6 to make his final decisions. Any measures passed by the Hawai‘i State Legislature this session that are not on this list will become law with or without Gov. Ige’s signature.

 

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