Cutting State Spending To Help Lahaina Is Only Real Choice

by Keli‘i Akina

By their nature, emergencies tend to be sudden and unforeseen. As the devastating example of Lahaina has shown us, emergencies can come with profound costs, both human and financial.

Political leaders can anticipate such problems by putting away money in emergency funds or keeping government spending low in order to build up a surplus that will serve as a cushion, if necessary.

Unfortunately, that’s not what Hawaii has done. Instead, lawmakers have consistently increased spending through the years, despite being warned that such high spending is unsustainable.

The golden rule of budgeting is that government spending should not outpace the expansion of the private sector. Yet, between 2013 and 2022, Hawaii’s state budget ballooned by 87% while the private sector increased by only 24%.

A confluence of factors resulting from the COVID-19 crisis led to a modest surplus, but that was short-lived. Rather than save for the future, the Legislature went on an ill-advised spending spree in 2023. Even after Gov. Green chipped away $1 billion, total spending still busted through the constitutionally mandated state spending cap by more than $1 billion.

Thanks to disappointing revenue projections and higher costs, this year’s budget was set to exceed that cap again. But now that the costs associated with Lahaina’s recovery are higher than anticipated, the problem is even worse.

Originally, Gov. Josh Green’s administration estimated that Lahaina’s recovery would cost $600 million over the next four years. Now, the state is trying to determine whether that amount will be exceeded in just one year.

Already, the governor has asked the state Legislature to immediately pass a $362 million appropriation for Lahaina relief — in addition to the $199 million that was allocated to the wildfire response last year. This has forced the Legislature to go hunting for more funding, which in my view leaves only real option — spending cuts.

Some people might suggest the state could take on more debt to pay for it all, but that’s not a solution. Debt is borrowing against the future. All it would do is delay the pain while making it more expensive for Hawaii residents in the long run.

Higher taxes aren’t the solution either. Hawaii already has the nation’s second-highest tax burden, highest cost of living and highest average housing prices.

Given our declining population and stagnant economy, we simply cannot afford to raise Hawaii’s tax burden any further.

That means the only remaining option is to cut the budget. Legislators have anticipated this, and are considering everything from across the board 10%-15% budget cuts to canceling the redevelopment of Aloha Stadium.

Budget cuts inevitably bring on complaints from groups who don’t want to see some programs lose a penny of government funding. But the fact is that we have no other choice if we are going to do the right thing for Lahaina victims.

In truth, we should have embraced responsible budgeting years ago. Not only would it have put our economy in a better place, but it might have left us better able to respond to emergencies such as the Lahaina wildfire.

Cutting the budget — and resisting the urge to increase it again — will empower us to help Lahaina and build up the surplus we need to be prepared for future emergencies.

KELI‘I AKINA is the president and CEO of the Grassroot Institute of Hawaii.

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