House lawmakers unanimously approved a draft state budget Wednesday that includes $1 billion to help finance the recovery effort for Maui for this year and next while maintaining state operations without widespread budget cuts.

House Finance Committee Chairman Kyle Yamashita told reporters after the vote the state had been projecting a year-end surplus of $1.34 billion at the start of this session in January, which helped to make it possible for lawmakers to commit such a huge sum to the Lahaina wildfire recovery.

“The costs to ensure the safety net and recovery of our community will be enormous,” Yamashita warned colleagues in a floor speech before the vote.

But he said the “safety net” of government services must be maintained because Hawaii residents are still struggling with the impacts of the pandemic, homelessness and the high cost of living in the islands. Yamashita assured his fellow House members the proposed budget does that.

Yamashita told reporters after the floor vote that lawmakers don’t even need to tap into the state’s $1.5 billion emergency budget reserve fund — better known as the “rainy day fund” — because the state can use surplus cash to pay for the near-term Maui recovery costs.

“We’re not even close to looking at touching any reserves at this time. So, we will be fine,” said Yamashita, who represents the Maui communities of Pukalani, Makawao and Kula.

The Senate Ways and Means Committee has taken a much more dire view of the budget situation in recent weeks, with Chairman Donovan Dela Cruz instructing state departments to prepare for potentially painful cuts of 10% to 15%.

Yamashita said the House’s proposed new budget calls for $10.73 billion in spending for operations this fiscal year, and $11.315 billion in the year that begins July 1. However, actual state spending will certainly be considerably greater because lawmakers are also advancing separate bills that would authorize additional funding.

One big-ticket item that was not included in the proposed House budget is back hazard pay for public workers, which House Speaker Scott Saiki has estimated could cost the state as much as $300 million. Yamashita said the House is planning for that payout, but did not include hazard pay in the proposed budget.

Yamashita said the Maui recovery money in the proposed House budget includes $65 million for the state’s share of the One Ohana fund to compensate people who were killed or seriously injured in the Aug. 8 wildfire, and $122 million for a Maui housing program announced in November.

Also included in the budget is $66 million to replace funds that were spent by state entities such as the Department of Human Services that responded directly to people affected by the fires, and $150 million as a potential subsidy for Maui County.

The proposed budget also includes $500 million for this year and next for shelter and other support costs for people who may be ineligible for assistance from the Federal Emergency Management Agency.

That money will address a $500 million contract the state signed with Red Cross to provide shelter, meals and other support services for fire survivors. That deal is costing $1,000 per day per family for people staying in West Maui hotels.

The state originally expected FEMA would pay 90% of those costs and the state share would be $50 million. However, FEMA has so far declined to pay many of those costs, and disputes over who is eligible for federal support is driving much of the state’s unexpected costs of the fire response.

Estimates of how much the state will have to pay under the contract have been fluid. Senators were told on Feb. 20 that 820 households had been deemed ineligible for federal support, and then told on Feb. 29 that number had dropped to 659 families. 

More recently, staff for the Hawaii Emergency Management Agency said on March 4 the number of ineligible families stood at 555, which was described as a “snapshot” in time.

HIEMA Administrator James Barros said the negotiations with FEMA over who is eligible for federal support will likely continue for years to come, and Yamashita agreed.

“Many of these expenditures will be FEMA-reimbursable, but it has taken years to get reimbursed for past disasters,” Yamashita told House members on Wednesday. “We need to make sure that this budget can withstand a short-term shock, and important services for our community retain critical funding.”

“All known potential costs for programs associated with aiding the survivors of the wildfire have been appropriated in this budget,” Yamashita said. He said that means Gov. Josh Green will not need to use his emergency powers to strip money from state programs to cover fire recovery costs.

Yamashita said in his floor speech that “there is still a lack of (a) clear, comprehensive plan from the administration to address this complex issue that has come to light over the past eight months. Fully determining the state’s exposure will be an extremely challenging, an extremely challenging task.”

State Rep. Scott Nishimoto, a member of the Finance Committee who oversees construction funding, said the House budget gives the state Department of Education extensions on funding for dozens of school construction projects the department had planned to delay or cancel.

Nishimoto said the House funded all of the construction projects that were requested by Green for Lahaina, but scrapped some other projects not related to Maui to make room.

For example, the House is proposing to cancel the Aloha Stadium redevelopment and instead make improvements to Ching Field at Manoa, a step that Nishimoto said freed up $135 million in bond capacity for other projects. It is unclear if the Senate will agree to that plan.

Nishimoto said the proposed House construction budget for next year is $1.5 billion.

One lawmaker who expressed frustration with the House proposal was Republican Rep. Gene Ward, who suggested in a floor speech that even legislative staff need “the Da Vinci Code” to understand the budget document. “The public has an even more difficult time doing it,” he said.

The proposed budget now moves to the Senate for further consideration, and Yamashita acknowledged it will probably change dramatically before the Legislature’s scheduled adjournment on May 3.

“This is just a starting point for us,” he said.