Transcript Highlights:

• The budget proposal before you from the Governor is still relying on borrowing, as well as using reserves
• the limited budget condition.
• What happened is people were searching for reservations and then that in their budget.
• , reserved, reserved, and you're thinking, what are we doing as a state?
• And so... ...signs that say reserved, reserved, reserved, and you're thinking, what are we doing as a

Transcript Highlights:

• And this is another chart that illustrates the exposure within the state budget to federal uh uh budget
• If we have a large budget shortfall, I think the reserves have been set aside to address that.
• So reserves are higher on our list, maybe even before tax increases and, and budget cuts, which I, I
• Is the most protected reserve fund.
• It's really a school sort of reserve reserved for schools.

Committee: House Revenue Stabilization & Tax Policy Committee

Transcript Highlights:

• c> for</c> reservations okay with reservations for reservations okay with reservations for representative
• Also noting the reservation from Representative Eoto. Anyone else voting with reservations?
• Also noting the reservation from Representative Eoto. Anyone else voting with reservations?
• Also noting the reservation from Representative Eoto. Anyone else voting with reservations?
• I'll be voting with reservations.

Committee: House Water & Land

Summary: The Committee on Water and Land met on March 18, 2025, and heard testimony on several measures related to state funds, public lands, wastewater, port infrastructure, and other land and water issues. Early in the hearing, SB 1395, relating to state funds and climate mitigation financing, drew support from the Governor’s office, the Hawaii Climate Advisory Team, the State Energy Office, and others, while the Tax Foundation of Hawaii urged the committee not to revert to the original version because of concerns about a special fund and compliance with state statutes. After discussion, the chair said the bill would be deferred because of budget uncertainty and the need to preserve reserves, and members agreed to that recommendation. The committee then took up SB 1393, SB 1669, SB 102, SB 1511, SB 1083, and SB 946, among others. SB 1393 and SB 1669 received support or comments from agencies including the Attorney General’s office, the State Energy Office, and other departments; SB 1669 was sent on with amendments and to Finance for further review. SB 102, concerning a third-party review process, prompted questions about who would select consultants and whether the bill would affect staffing and permitting costs; it was advanced with amendments, with one member noting reservations about the shift to private third-party review. SB 1511, SB 1083, and SB 946 also moved forward, generally with amendments or as amended, and several members noted reservations tied to budget impacts or statutory language. The committee also heard testimony on HB 1393, which involved public lands and school facilities, where the Department of Education sought a change to the deletion language and the School Facilities Authority said it stood on its written comments. For SB 146, relating to the Ali Canal, the University of Hawaiʻi and DLNR supported the measure, and a member asked about the estimated annual cost, which was described as $125,000 per year. On SB 946, members discussed whether removing the term “person” could narrow the law too much; after that discussion, the committee agreed to restore the term and proceed with an HD1. The meeting ended with the committee recessing after completing its agenda and adopting the chair’s recommendations on the measures considered.

Transcript Highlights:

• JFAC is trying to put their budgets together, trying to figure out what's in their maintenance budget
• When we look at the Medicaid budget, it's only 18% of that budget is actually general funds.
• We'll take it out of the reserves.
• And while I appreciate the activity of going through these budgets, this is not good budgeting.
• This is not how budgeting works.

Committee: House Health and Welfare

Transcript Highlights:

• budget reserve policy.
• over</c><00:31:27.320><c> the</c> budget reserves have grown over the budget reserves have grown over
• </c> budget reserve policy. budget reserve policy.
• budget reserve funding remains flow and budget reserve funding remains at<00:31:37.640><c> a</c><00:31
• c> available</c> fund budget reserve, those are available fund budget reserve, those are available to

Committee: Senate Finance

Transcript Highlights:

• budget.
• Flat budget.
• budget.
• and see where they're over-budgeted and take some of that budget away.
• dollar budget.

Transcript Highlights:

• With<00:56:45.320><c> reservations.</c> With reservations. With reservations.
• With<01:14:10.920><c> reservations.</c> With reservations. With reservations.
• I rise in support with reservations. reservations. reservations.
• Reservations. So ordered. With reservations. With reservations.
• Reservations. Reservations. Reservations.

Transcript Highlights:

• </c> current budget. current budget.
• </c><00:08:49.360><c> Reservation.</c> present. Anyone voting? No. Reservation. present.
• </c> voting no with reservation? voting no with reservation?
• </c> reservation? Recommendation adopted. reservation? Recommendation adopted.
• </c> voting no with reservation? voting no with reservation?

Bills: SB99 , SB585 , SB2060 , SB2069 , SB2110 , SB2115 , SB2152 , SB2211 , SB2259 , SB2315 , SB2342 , SB2382 , SB2442 , SB2446 , SB2485 , SB2544 , SB2577 , SB2580 , SB2861 , SB2919 , SB3326

Committee: Senate Ways and Means

Summary: The Committee on Ways and Means met for decision-making only and adopted recommendations on a long list of Senate bills, with no oral testimony taken. Early actions included SB 99 to pass unamended, SB 585 to pass with a date correction to 2015, SB 2060 to pass with amendments involving public project lists, legislative approval for fund transfers, and removal of certain appropriations, and SB 2069 to pass with amendments extending a sunset date and requiring transit-oriented development zoning. The committee also advanced several other measures, including SB 2110, SB 215, SB 2259, SB 2382, SB 2442, and SB 2485 unamended, while SB 2152, SB 2315, SB 2446, SB 2919, SB 2577, SB 2580, and SB 2861 were moved with various amendments, mostly date changes, appropriation blanks, or technical clarifications. A substantial portion of the meeting focused on SB 2211, where Department of Human Services officials explained how the department was covering costs by using restricted funds and shifting Med-QUEST funding, and noted a need for $14 million plus support for $16.5 million in ACA enhanced tax credit subsidies. The chair indicated the bill would move forward with amendments, including blanking the appropriation pending more information on lapses, and the recommendation was adopted. SB 2544 was also amended to remove a specific appropriation and replace it with a blank cap on funds from DUR, and SB 2342 was amended to require projects to be in transit-oriented development zones and to reflect prior committee concurrence. The most extended debate was on SB 3326, which would address utility restructuring. One senator opposed the bill, arguing it could raise rates, worsen reliability issues, and disrupt an existing utility without a clear plan, especially given island-specific conditions. Supporters argued the bill would separate generation from transmission and distribution, create competition, protect union jobs, and respond to aging infrastructure and financial weakness in the utility sector. After recesses and discussion of the Public Utilities Commission’s role, the chair changed the recommendation from pass unamended to pass with amendments requiring the PUC to conduct a study, provide an interim report before the next session, and a final report the following session. That amended recommendation was adopted, and the meeting then adjourned with no further business.

Transcript Highlights:

• reserves for both FY25 and FY26.
• The anticipated FY25 reserves general fund reserves are estimated at $3.47 billion, or almost 34 percent
• FY25 reserves are projected at almost 34 percent and FY26 reserves at 36 percent.
• Those both have been added and counted towards reserves, and that's about 8% of reserves now.
• balance our budget?

Transcript Highlights:

• The budget proposal before you from the Governor is still relying on borrowing, as well as using reserves
• Even though the Governor's budget proposal is balanced for the 2026-27 budget year based on the borrowing
• the limited budget condition.
• The budget proposal The budget proposal before you today requests $400,000 for program delivery.
• , reserved, reserved, and you're thinking, what are we doing as a state?

Summary: The Senate Budget Subcommittee on Resources, Environmental Protection, and Energy opened its first hearing with remarks from the chair and members emphasizing climate change, resiliency, clean energy, natural resources, and the need to make careful budget choices in a constrained fiscal environment. The Legislative Analyst’s Office presented an overview of the natural resources and environmental protection budget, warning that although current revenues are strong, the state faces significant out-year deficits and should apply a high bar to new ongoing spending, use special funds and fees carefully, and focus on critical health and safety needs. The LAO said the Governor’s Proposition 4 spending plan was generally reasonable and consistent with bond requirements, but urged legislative oversight and reporting, especially where bond funds interact with General Fund proposals. Secretary Wade Crowfoot then described the Natural Resources Agency’s recent accomplishments and priorities, including wildfire resilience, water reliability, coastal protection, outdoor access, biodiversity, tribal partnerships, and streamlining project delivery. He highlighted major investments in climate and resilience, the role of Proposition 4 in continuing those efforts, and the need to modernize water infrastructure, including Delta conveyance and other regional conveyance projects. Members asked about Delta conveyance, invasive species, permitting delays, and the impact of federal staffing cuts; Crowfoot said the administration is pushing projects forward, supports a beneficiary-pays approach for conveyance, and is filling gaps left by federal reductions where necessary. The committee then heard from the Department of Parks and Recreation. Director Armando Quintero reviewed the state park system, outdoor access programs, tribal agreements, wildfire and forest resilience work, and deferred maintenance funded by the climate bond. The LAO recommended rejecting the proposed ongoing General Fund transfer for the California State Parks Library Pass program, saying it did not meet the high bar for new spending, while several members strongly supported the program as a low-cost, high-value access tool. Members also pressed Parks on reservation system problems and no-show vacancies; staff said new rules and enforcement will take effect July 1 and that vacancies are being opened up sooner. The department also presented low-cost accommodation projects, which the LAO supported. Finally, the Department of Fish and Wildlife introduced its new director, Megan Hurdle, who outlined the department’s mission, staffing, service-based budgeting, and Proposition 4 proposals for salmon tagging, hatchery improvements, and public access lands. She emphasized the department’s role in biodiversity conservation, permitting streamlining, law enforcement, and human-wildlife conflict outreach, and said the agency is working to close a service gap identified in its budgeting analysis. No votes were taken during the hearing.

Transcript Highlights:

• They have also requested $750 million in this budget deficit, in this budget. $750 million in this budget
• It will help identify the reasons behind the accumulation of reserves and excessive reserve amounts,
• Our college districts are required to monitor their budgets when their reserves get too low and threaten
• This is not responsible budgeting.
• reserve accounts.

Summary: The committee heard several audit requests and related testimony. The first major item was an audit of Coachella Valley Unified School District’s contract and fiscal management. The author and supporters described long-standing fiscal mismanagement, large budget shortfalls, layoffs, contracting concerns, and questions about the district’s foundation and use of public funds. District representatives and the Riverside County Office of Education said the district is already under fiscal oversight, has a stabilization plan, and is working to reduce deficits and improve student outcomes. After extensive debate and public comment, the motion to approve the audit was put on call because the committee did not have the required votes from both houses at that moment. The committee then approved an audit of East Bay transit agencies in Alameda and Contra Costa counties. Senator Wahab argued the region’s many overlapping transit agencies create fragmentation, duplication, and inefficiency, especially amid a fiscal cliff and possible future tax increases. Transit agencies and labor representatives opposed the audit, saying the agencies already undergo multiple audits, serve distinct local needs, and are implementing regional coordination efforts. After testimony from agency leaders and public commenters, the committee voted to approve the audit. The next item was an audit of California Community Colleges’ unrestricted reserves. Senator Archuleta and supporting faculty representatives said reserves have grown substantially and may be diverting resources from student services, instruction, and workforce programs. They argued there is little oversight when reserves become too high. The Chancellor’s Office and Calbright College were invited to respond, and the audit objectives focused on reserve growth, reasons for high balances, oversight by the Chancellor’s Office, and effects on students and staff. The transcript cuts off during the Chancellor’s Office response, so the final committee action on this item is not shown.

Transcript Highlights:

• The 2024 Budget Act did. So the governor's budget is just presenting...
• There were significant withdrawals from the reserve in the previous budget act, and this would be a step
• I know in the future, maybe we'll have a deeper dive on the reserves. And budget issues.
• The rest of our reserves... which I believe is about $2.4 million, is really encumbered reserves—reserves
• Chancellor's budget, the Chancellor's Office budget.

Transcript Highlights:

• &gt;&gt; I<01:05:04.960><c> reserve.</c> &gt;&gt; I reserve. &gt;&gt; I reserve.
• &gt;&gt; I<01:16:42.800><c> reserve.</c> I reserve. He reserves.
• . budget. budget.
• Gentle from Texas reserves. reserves. reserves.
• Gentleman from York reserve. reserve. reserve.

Transcript Highlights:

• Reservations.
• Reservation? Reservations? Reservations for him. No way. And recommendation adopted.
• :26:19.159><c> Senator</c> reservation reservations for Senator reservation reservations for Senator
• Reservations Reservations Reservations 1378<00:26:23.200><c> for</c><00:26:23.520><c> Senator</c><00:
• Anyone voting no with reservation. reservation. reservation.

Summary: The committee heard testimony and then took up House Bill 1369, which would repeal several tax credits and exemptions, including the renewable fuels production tax credit. Testimony was overwhelmingly opposed: Hawaii Gas, the Hawaii Renewable Fuels Coalition, and the Tax Foundation all raised concerns, with opponents arguing the renewable fuels credit has supported major local investment, cleaner fuel production, and energy resilience, while Hawaii Gas warned repeal would raise costs for customers. The Department of Taxation said it did not take a position but provided revenue estimates, saying the bill would increase revenues by about $33.8 million in FY 2026 and $121.7 million in FY 2027; DBEDT said it would follow up on broader economic impacts. The chair proposed a series of amendments that removed some repeals, added five-year sunsets to certain exemptions, narrowed or conditioned others, and tied the renewable fuels exemption to a dollar-for-dollar match for renewable fuel production certified by the state energy officer. The committee recommended passage with amendments, and the motion was adopted with multiple members voting with reservations. The committee then moved through a series of other measures. HB 159, HB 244, HB 280, HB 316, HB 716, HB 1298, and HB 1295 were recommended for passage, with HB 1295 amended to change a date to 2050. HB 455 was amended to remove the Hawaii Startup Business Loan Program language and instead fund DBEDT contracting for startup financing and support, excluding businesses already eligible for the community-based economic development loan program. HB 504 was amended to add non-recurring appropriations for the Hawaii Tourism Authority, conditioned on formal commitments to purchase local products under the HRS 27-8 timeline; members discussed the cruise passenger tax and where the revenue would go, and the bill was passed with amendments. HB 606 was amended to recognize DHHL authority over mercantile projects licenses, remove some reporting requirements, and replace the appropriation with $25 million for mercantile projects and $25 million for repair and maintenance. HB 1378 was amended to allow the foundation to enter public-private partnerships, adjust appropriation language, and cap a proposed limit at $15 million, with the committee noting the changes addressed concerns raised in testimony from BNF and the attorney general. HB 974 was deferred indefinitely because the House had already passed SB 1501. Finally, HB 1007 was amended to rename the transit-oriented development infrastructure district program as the transit-oriented community improvement program, consolidate the boards into one, expand board membership, add conflict-of-interest provisions, and allow legislative designation of areas; after discussion about HCDA’s role and the stadium district, the measure was adopted with one reservation.

Transcript Highlights:

• No, we reserved our land.
• So we have the 1867 treaty that lays out the Spirit Lake Reservation, but also the Lake Traverse Reservation
• Stated us on the Spirit Lake Reservation.
• Some of them were even less than that, depending on what your budgeting entities budget for dollars in
• As far as budget neutrality, As far as budget neutrality goes, an 1115 demonstration must not increase

Committee: Joint Tribal and State Relations Committee

Transcript Highlights:

• as high as 90... ...reserves that are in the budget and each and every one of them.
• Get these reserves in line.
• Get these reserves in line.
• -27, the current budget year.
• They'll turn to reserves to try and use those reserves to sustain the staffing levels that they have,

Summary: The Senate Budget Subcommittee on Education heard updates on several higher education budget items, beginning with a pulled follow-up item on the State Library’s administration of the Imagination Library. The chair said the committee had received new documentation from the State Library and the Department of Finance late the prior evening, and staff would review it before deciding whether additional oversight or accountability measures are needed. The committee then turned to the California Community Colleges budget request, with Chancellor Christian outlining strong post-pandemic enrollment recovery, asking for 3% enrollment growth funding, changes to the three-year average formula, removal of the 10% growth cap, and support for several one-time and ongoing initiatives including the Common Cloud Data Platform, credit for prior learning, AI literacy, Rebuild L.A., veterans services, Calbright College, and the Chancellor’s Office. Senators raised concerns about district reserves, part-time faculty conditions, veterans’ credit pathways, and fraud prevention in enrollment systems; the chancellor said the system is using DMV and other identity verification tools, AI screening, and audits, and that reported final enrollment numbers are clean. The committee then reviewed the student-centered funding formula. The Department of Finance described the governor’s proposal to fully repay $408.4 million in deferrals, provide a 2.41% COLA, and add one-time funding to cover current-year apportionment costs, while the Legislative Analyst’s Office recommended prioritizing the proposals within available Proposition 98 funding. Community college finance staff said most districts are growing, many would benefit from current-year funding rules, and that without the proposed apportionment funding districts could face a deficit factor and reduced course access. Members asked about infrastructure prioritization, deferred maintenance, safety, accessibility, and campus police; staff explained that life safety projects are prioritized first, followed by modernization and growth-related facilities, and that colleges are built to high safety standards under the Field Act. Enrollment growth was discussed separately, with Finance and LAO supporting the governor’s 1.5% growth proposal split across two fiscal years, while noting that growth is being driven in part by dual enrollment, regional demographic shifts, and unemployment. The Chancellor’s Office said 54 of 72 districts grew year over year and that funding more growth could help districts move off hold harmless status, though some districts face long-term demographic challenges. The committee also heard from Calbright College President Agita Menon, who described Calbright’s role serving adult learners statewide, its completion and wage gains, and the governor’s proposed $38 million ongoing funding. The LAO recommended transitioning Calbright to the student-centered funding formula beginning in 2027-28, arguing that the current proposal lacks a clear funding rationale and performance linkage; Calbright responded that its competency-based, non-credit model is structurally different and should be funded separately, while agreeing to continued accountability reporting. Finally, the committee received an update on the Community College Higher Education Student Housing Program. Finance said the governor proposes about $11 million ongoing General Fund for debt service on approved student housing projects, and that 11 projects are in the financing pipeline, with two completed, three under construction, four in working drawings, and two in preliminary plans. Finance also noted that some projects have withdrawn and that about $81 million in bond authority remains unallocated, which the Legislature may need to address going forward.

Transcript Highlights:

• And I reserve.
• And I reserve. The Speaker pro tempore: The gentlelady reserves.
• Houchin: I reserve. The Speaker pro tempore: The gentlelady reserves.
• Houchin: I reserve. The Speaker pro tempore: The gentlelady reserves.
• HOUCHIN: I RESERVE. THE SPEAKER PRO TEMPORE: THE GENTLELADY RESERVES.

Transcript Highlights:

• We saw MassHealth costs grow by 10% in the FY2026 budget.
• We saw mass health costs grow by 10% in the FY26 budget.
• There's a lot of pressures on this budget.
• Reserves are going to be the number one thing we go to there.
• We work together to, throughout the years, build up reserves.

Committee: Joint Joint Committee on Ways and Means

Summary: The Senate and House Ways and Means chairs opened the FY 2027 consensus revenue hearing by emphasizing the need for a balanced, fiscally responsible budget amid federal funding cuts, health care cost pressures, and uncertainty around the federal tax law changes referred to as OB3. They also noted the state’s current revenue performance is slightly above benchmark and paid tribute to the late Representative Anne Margaret Ferranti. Secretary of Administration and Finance Matthew Gorkowitz echoed the call for caution, saying Massachusetts has protected core services while building reserves and that the FY27 budget process begins with a careful revenue estimate. Department of Revenue Commissioner Jeff Snyder, along with DOR staff, presented FY26 and FY27 tax forecasts and identified major drivers and risks: OB3’s negative impact on state revenue, surtax collections, labor market conditions, capital gains, and corporate/business excise taxes. DOR estimated OB3 would reduce FY26 revenue by about $664 million and FY27 by about $282 million, while surtax and capital gains were expected to remain strong in FY26 but soften in FY27. Members questioned the outlook for surtax, capital gains, and the potential fiscal effect of a ballot question reducing the income tax rate from 5% to 4%; DOR said that proposal could cost roughly $4.2 billion to $4.8 billion annually, with a smaller but still significant impact in FY27 because of phase-in timing. Treasurer Deb Goldberg testified next on the stabilization fund, lottery, PRIM, unclaimed property, and the Alcoholic Beverages Control Commission. She reported the rainy day fund at about $8.1 billion, said the lottery was on track for $1.5 billion in FY26 net profit and projected $1.25 billion in FY27, and highlighted that iLottery is expected to launch in summer 2026 with revenue beginning in FY27 and dedicated to child care initiatives. She also described strong PRIM performance and record unclaimed property returns, while members asked about the child care use of iLottery revenue, multilingual outreach, and the economic impact of expanded liquor licensing. Mass Taxpayers Foundation President Doug Howgate and Tufts’ Evan Horowitz then offered differing revenue outlooks and policy warnings. Howgate projected modest growth, cautioned against overusing reserves for ongoing obligations, and urged caution on federal tax conformity changes and health care spending pressures. Horowitz projected higher FY26 and FY27 revenues than other witnesses, warned that the surtax and capital gains make the tax system more volatile, and said a 4% income tax ballot question could reduce FY27 revenues by roughly $800 million to $1 billion. He also flagged the rent control ballot question as a potential risk to municipal finance and suggested the state consider giving a permanent home to the independent revenue model used by Alan Clayton-Matthews.

Transcript Highlights:

• reserves.
• reserves.
• reserves.
• reserves.
• reserves.

Transcript Highlights:

• Maintenance budgets.
• and say we're going to direct funds from some of these reserves to cover some of the budget requests
• look at all the budgets and say we're going to direct funds from some of these reserves to cover some
• It— Budget submissions and then the governor's recommended budget.
• required reserve.

Summary: The committee received a broad budget overview from Legislative Services staff on the state’s fiscal position, focusing on the general fund, structural balance, cash reconciliation, and the governor’s budget recommendations for fiscal years 2026 and 2027. Staff explained that projected revenues are below the current budgeted level, creating a need for either budget reductions or the use of cash balances and reserve funds to maintain balance. They reviewed major drivers of spending growth over recent years, including Medicaid expansion, public schools, the State Public Defender, IT services, and water resources, and noted that these statutory and ongoing obligations are crowding out other spending. Members also discussed the governor’s proposed use of interest earnings and reserve balances from several funds, the Budget Stabilization Fund cap, and the policy question of whether changes to fund interest allocations would require legislation or could be handled through appropriation language. The committee also reviewed current-year adjustments, including supplementals, rescissions, deficiency warrants, and the governor’s proposed holdbacks. Specific items discussed included public school enrollment adjustments, the proposed rescission of Empowering Parents funding, Medicaid growth and provider rate changes, Department of Corrections costs tied to inmate placement and medical services, invasive species treatment funding, and a possible tax conformity impact tied to federal law changes. Members asked about fire suppression deficiency funding, the use of reserve balances, and the difference between current-law and governor-recommended spending levels. Staff emphasized that the governor’s budget relies on short-term money and reserve transfers to smooth the current deficit, while the legislature must decide whether to follow that approach or make deeper structural changes. Later, staff provided an overview of the budget hearing process and the Legislative Budget Book, explaining the standard reports, agency organization charts, fund analyses, performance measures, and five-year snapshots that committees will use during hearings. Another presentation clarified the difference between deficiency warrants and supplemental appropriations, noting that deficiency warrants cover certain last-year expenses authorized by statute, while supplementals adjust the current-year appropriation and can apply to general, dedicated, or federal funds. The committee then heard a detailed presentation on state health insurance costs, including rising medical claims, reserve balances, the 80/20 employee-employer cost split, and projected FY 2027 premium increases. Members asked about school district participation in the state plan, the role of the insurance carrier contract, and whether broader participation could lower costs. No votes were taken during the meeting, and the committee adjourned after the presentations and questions.