The state Legislature is back in session, and its focus this year will be on federal funding impacts and addressing the cost of living in Hawaiʻi.
”We're going to be thrown many other crazy ideas. Some will be implemented, and some will not. So it's a very fluid situation here. We have to see where we're at, and at different points in time, this budget is going to evolve to address those concerns,” House Speaker Nadine Nakamura said Wednesday.
Federal actions over the first year of this Trump administration have led to impacts on the state level, and that will likely be the case going forward.
“Every week the president does something crazy, and then it's state legislatures that sometimes have to clean up the mess,” said Sen. Jarrett Keohokalole.
“The big one I think we're focused on in the Health Committee is the cuts to Medicaid and the disruption with SNAP (Supplemental Nutrition Assistance Program).”
Food and health care programs were among the hardest hit federal services, and the state has been scrambling to cover the loss of those funds so that residents can have continued access.
Many of the Medicaid cuts will not go into effect until 2028, but some changes, like new work requirements for SNAP recipients, have already been implemented.
House Finance Chair Chris Todd estimated that the changes to Medicaid and SNAP will cost the state about $100 million a year.
“In terms of our cost share, in terms of having to scale up our workforce to meet new requirements, that's kind of a ballpark figure just for those two programs,” Todd said.
“But there are a number of other areas where we are impacted. I think for perspective, we have thousands of state employees that are either fully or partially federally funded. So it gets very complicated anytime you have a government shutdown and those payments cease, it puts us in a weird spot.”
Although the state's rainy day fund totals about $1.5 billion, Gov. Josh Green has proposed a pause to the historic income tax cut that the state Legislature passed in 2024. It’s supposed to continue to ramp up over the next five years, costing the state over $5 billion in revenue by 2031.
Leaders in both the House and Senate are evaluating what a pause would look like for higher-income earners who would be impacted under Green’s proposal.
Senate President Ron Kouchi wanted more information on the revenue the state could generate by stopping the tax cut at salary thresholds between $100,000 and $500,000.
“There are those at the higher end who had significant tax benefits in the ‘(One,) Big, Beautiful Bill’ at the federal level, and it did not come down to those lower wage earners. And I think what I would want to see generally is a balance about helping those who are left out of the federal bill,” Kouchi said.
Green’s proposal was also well-received in the House.
“I applaud the governor for taking a realistic approach for how we can kind of fix the projected shortfalls,” House Finance Chair Todd said. “All options are on the table. … I do think that it is our priority to make sure that whatever does pass out of the House this year, it is not placing additional burden on low- and middle-income families.”
Meanwhile, the Legislature is also grappling with the allegations that an “influential state legislator” accepted $35,000 in a brown bag in 2022.
State Attorney General Anne Lopez recently announced that her office would investigate the situation — a decision praised by House Speaker Nakamura.
“This is a dark cloud over the Legislature and this is something that really has taken so long to resolve. I think that is what's very frustrating for many of us here. It's very disheartening that a few bad apples make it hard for those who are trying to do good work here and do the people's work,” Nakamura said Wednesday.
Kouchi said that if the lawmaker is currently in the Senate, “There would be a disruption, there could be removal from office, whether by force or voluntarily, based on the facts that come out.”
At the same time, lawmakers will continue to address long-standing issues. During his opening remarks to the Senate, Kouchi said many of last year's priorities will continue to be top of mind.
Nakamura had a similar sentiment.
“What's driving our actions this session is just dealing with the high cost of living in Hawaiʻi, and the key components to that is housing, transportation, and child care and health services,” she said.
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