Few state bills this year face potential veto – West Hawaii Today

Gov. Josh Green may block the Legislature’s intended deposit into the state’s “rainy day” fund for a third time in four years.

Green announced on Friday that he intends to veto a bill that lawmakers passed in May to put $50 million of state general fund revenue next fiscal year into Hawaii’s Emergency and Budget Reserve Fund.

The legislation to make such a deposit was one of four bills that Green said he may veto from among 267 bills the Legislature passed this year. The governor plans to further analyze some of the four bills before making a final decision, and has until July 15 to veto any of the four bills or they will become law.

Green said in a statement that it would be financially imprudent to sock away $50 million in general fund money when the reserve fund has a record balance over $1.5 billion while other high-priority needs exist.

Priorities cited by the governor were disaster- recovery efforts, affordable- housing development, lowering the cost of living for residents and reducing unfunded state liabilities that include pension obligations.

If Green vetoes the rainy day fund deposit measure, Senate Bill 2600, it would be the only major funding appropriation vetoed this year. The governor on Friday signed the state budget bill, House Bill 1800, without using his line-item veto power to strike any appropriations.

SB 2600 was expected to boost the fund’s estimated balance to about $1.67 billion from around $1.62 billion. But Green has previously opted to keep more state revenue available for future uses by nixing deposits into the reserve fund.

In 2023, Green vetoed a $500 million rainy day fund appropriation after a projection for state revenue growth was reduced shortly after lawmakers passed the budget bill.

Then in 2024, the governor vetoed a $300 million appropriation for the fund, saying that the state should be preserving its cash reserves instead of boosting the reserve fund’s balance beyond $1.5 billion.

Hawaii’s Constitution requires that some amount of revenue be deposited into one or more of three places whenever there is at least a 5% general fund surplus in two successive fiscal years. The options are the rainy day fund, pocketbooks of Hawaii taxpayers and a trust fund to pay for future retirement benefits of Hawaii government workers.

To fulfill the constitutional requirement in 2024, $1 deposits were made into the two funds.

The state’s cash balance is projected to be $1.88 billion at the end of this fiscal year on June 30, down from $2.12 billion a year earlier.

Without any additional deposits, the rainy day fund is projected to grow to $1.93 billion in the 2031 fiscal year from $1.62 billion at the end of this fiscal year, or by $300 million due to interest income.

The other three bills that Green may veto include one to form a commission recommending consolidation or closure of inefficiently operating public schools, one that would affect how the head of a teacher standards board is selected, and one that would affect employment at three state agencies.

HB 2344 would establish the Public School Realignment and Closure Commission modeled after a federal commission that recommended the consolidation or closure of unneeded military bases. Green said the state Board of Education and Department of Education already have authority and responsibility for such a task that may be duplicated by the proposed commission with no benefit.

SB 3262 would require that the Hawaii Teacher Standards Board submit three nominees for its executive director for selection by the BOE subject to advice and consent of the state Senate. Green said additional evaluation is needed to assess, in part, whether such a change creates ambiguity regarding governance and accountability.

SB 2338 would affect employment at the Hawaii Housing Finance and Development Corp., the Hawaii Community Development Authority and the Hawaii Public Housing Authority in part by limiting the salary of the HHFDC and HCDA directors to 99% of the governor’s salary. The bill also would establish conditions for employment contracts at all three agencies. Green said it may be possible to make changes sought under the bill administratively, and that more review is needed to determine that.

“Our assessments are guided by sincere dedication to our community, taking each opinion into consideration, with the goal of making decisions that truly reflect what is best for Hawaii,” Green said.

The governor added that putting four bills on his intent-to-veto warning list followed an extensive legal and fiscal analysis, and reflects collaboration and hard work between the Legislature, his administration and community stakeholders.

Last year, Green vetoed nine bills after vetoing 11 in 2024 and 13 in 2023.

The Legislature can override any vetoes with a two-thirds majority vote if the House and Senate call for a special session. However, Senate President Ron Kouchi (D, Kauai-Niihau) announced on Friday that the Senate does not intend to convene a special override session.