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Hawaii’s budget basics
According to the National Association of State Budget Officers (NASBO), Hawaii’s total expenditures in fiscal year (FY) 2021 were $24.4 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2021 were $2.7 trillion, ranging from $4.7 billion in Wyoming to $512.8 billion in California.
Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.
Per the US Census Bureau, Hawaii’s combined state and local direct general expenditures were $15.8 billion in FY 2019 (the most recent year census data were available), or $11,148 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,161.
Hawaii’s largest spending areas per capita were public welfare ($2,088) and elementary and secondary education ($1,693). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.
Hawaii’s combined state and local general revenues were $18.5 billion in FY 2019, or $13,066 per capita. National per capita general revenues were $10,563. Hawaii uses all major state and local taxes. Hawaii’s largest sources of per capita revenue were general sales taxes ($2,889) and federal transfers ($2,179). Hawaii collected a relatively large amount in sales tax revenue because its tax— called a general excise tax (GET)— is levied on all business activities whereas most state general sales taxes are only levied on the final transaction and mostly on goods (not services). For example, purchasing services from a lawyer or accountant are exempt from tax in nearly all states but the GET applies to these purchases (and all other services) in Hawaii.
Governor David Ige, a Democrat, was elected in 2018 with 61 percent of the vote. The next gubernatorial election is in 2022.
Democrats control both the House of Representatives (47 Democrats to 4 Republicans) and Senate (24 Democrats to 1 Republican), with veto-proof majorities in both houses. Control of the governor’s mansion and each house of the legislature gives Democrats a trifecta in Hawaii. All Hawaii House seats are on the ballot in 2022 because representatives serve two-year terms. Senators serve a combination of two- and four-year terms during each decade’s legislative district apportionment cycle. This 2-4-4 term system ensures all Senate seats are up for election after new legislative district boundaries are drawn. All senators are therefore up for election in 2022.
Hawaii’s budget institutions, rules, and constraints
Hawaii uses a biennial budget. The legislature must pass a balanced budget, but it can carry a deficit over into the following year. Hawaii also limits spending growth with a formula tied to the state’s personal income growth. The rule is binding and requires a two-thirds legislative supermajority to override it. The state also imposes limits on total authorized debt and debt service incurred by the state.
(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)
Hawaii’s current budget
Hawaii enacted its FY 2022-2023 biennial budget in June 2021. The enacted budget included $15.9 billion in total spending for FY 2022 and $15.3 billion for FY 2023. It also included $7.4 billion in general fund spending for FY 2022 and $7.5 billion for FY 2023. (Hawaii’s definition of its general fund spending is not the same as NASBO’s definition, so the historical totals reported below are not comparable. See NASBO’s report for more detail.)
Under the American Rescue Plan, Hawaii will receive $1.6 billion in direct state fiscal aid and $472 million in local government aid from the federal government. As of January 2022, Hawaii had spent part of its state ARP funds on refilling its unemployment insurance trust fund, public health programs, economic development, and education spending.
According to NASBO, Hawaii’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:
FY 2021: $8.8 billion/$24.4 billion
FY 2020: $8.0 billion/$18.1 billion
FY 2019: $7.9 billion/$15.6 billion
For more on Hawaii’s budget, see
Hawaii’s economic trends
Hawaii’s per capita income (per the Bureau of Economic Analysis) was $60,389 in 2021, ranking 22nd among the states. It was below both the national average of $63,444 and the Far West regional average of $73,053. The state’s median household income (five-year estimate) was $83,173 in 2020, ranking fourth among the states and above the national average of $64,994. Hawaii’s poverty rate was 9.3 percent in 2020 (five-year estimate), below the national rate of 12.8 percent.
Although Hawaii’s averages tell a story about the entire state, Hawaii is composed of diverse localities. For example, the city of Hawaiian Ocean View’s median household income was $24,818, and its poverty rate was 55.2 percent; the city of East Honolulu’s median household income was $139,487, and its poverty rate was 3.3 percent.
Hawaii’s unemployment rate was typically below the national average before 2020, but has been relatively high during the pandemic. (See how COVID-19 is affecting state employment and earnings data.)
Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In Hawaii, the average unemployment rate in 2021 was 7.1 percent for white residents and 8.1 percent for Hispanic or Latino residents. (This is preliminary data. See the 2020 data for a more detailed breakdown of state unemployment rates by race and ethnicity.)