Gov. Josh Green’s State of the State speech Monday focused on balancing affordability with fiscal responsibility.
“In 2026 and in the coming years, we will keep finding ways to make living in Hawaiʻi more affordable,” he said.
“In 2025, the federal government's severe cuts and other actions took $3 billion out of our state's economy, leaving us with an unforeseen budget shortfall.”
Because of the shortfall, he proposed pausing the historic income tax cut that was implemented last year. It was supposed to ramp up over the next five years, costing the state billions of dollars in revenue.
“When people next year file their taxes for 2026, they can expect exactly what they've already been told and see that decreases in taxes,” Green said during a press conference after the speech.
“The plan is just to pause '27, '28 and '29, because if we don't, we will start running in the red.”
The pause is expected to bring back $1.8 billion in tax revenue. Green said he would use $600 million of that money for food security and child care needs.
“We really want to extend all of the tax breaks and the benefits to anyone who is in the working class. That's the best descriptor I can get,” he said.
“The devil will definitely be in the details about what the Legislature feels we have to bring back into the economy.”
Legislative leaders appear open to the idea
House Finance Chair Chris Todd expressed openness to the governor’s proposal.
“We do need to take action this session to shore up our long-term future,” Todd said.
“Whether that comes from that specific proposal, or if it's a combination of proposals, or if there are areas where we kind of agree and disagree, and we tweak things, I think that remains to be seen. And it's something we'll do as we consult our caucus, work with our minority caucus also, and our Senate counterparts in crafting what that specific package is.”
Senate President Ron Kouchi wanted a detailed breakdown of how people would be impacted. He said that they’ve been requesting the information since October.
“Our general statement has been that everything's on the table. And we want to make sure that those who are most impacted in our community or the most vulnerable will be protected,” Kouchi said.
“That's where we're all trying to get to. So when the details come out, we'll see if we're aligned or if the Legislature has an idea of maybe what should be adjusted.”
The rest of the governor’s speech continued to focus on initiatives launched at the start of his term in 2022: increasing affordable housing, kauhale villages for those experiencing homelessness, and attracting health care professionals to Hawaiʻi.
Green added that 2026 will be focused on implementing many of the things he set out to accomplish, like the Green Fee, which will be dispersed this year for climate resiliency projects.
“We've done these huge things, right? We did this gigantic environmental piece. We dropped taxes beyond anyone's expectations, built 25 villages, and so if I lay too many of these super aspirational things, I think people are gonna get fatigued,” he said.
“I'd like this year to be a year … of implementation — and let people judge us on the work.
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