(The Center Square) – Hawaii lawmakers enacted a large income tax cut this year, and major budget reform will begin next year to ensure it stays in place, Gov. Josh Green said.
The plan includes eliminating positions that have not been filled in four to 10 years while increasing salaries for people on the job, he said.
The tax cuts will return $5.6 billion to taxpayers by 2031. By that time, 40% of working Hawaii residents will pay nothing in state income tax, according to information presented by the governor.
“How do you pay for that? You make sure your economy is churning ahead,” Green said in a news conference. “We are doing a lot of stimulus for our economy. There’s going to be a lot of growth because of the rebuilding of Maui and the housing boom we are now a part of, and frankly, it was just a burden on us because we couldn’t afford to live in Hawaii anymore.”
The fiscal year 2025 budget allocated $10.3 billion in general appropriations, including more than $200 million for Maui wildfire relief. Another $230 million is set aside for rental housing and $33 million will address homelessness, Green said. The rainy day fund has $1.5 billion.
The state is required to carry over a balance from the budget, which is $339 million. That number could increase as June tax collections are $60 million above projections, Green said.
The governor mentioned a lawsuit settlement that would require the state to have zero greenhouse emissions by 2045. The settlement announced last month does not indicate how much the state could spend on the court-ordered mandates aside from $40 million for public electric charging stations and charging infrastructure for all state and county vehicles by 2030.
Green previously touted a proposed tourism impact fee. On Wednesday, Green said the Hawaii Legislature must pass a climate or traveler impact fee unless it is willing to dig deeply into rainy day funds or actually make budget cuts.
“We have not cut any programs or services,” Green said. “We are just tempering expectations on what can actually get done.”
