Keaton PetersHawaii lawmakers have concluded their budget negotiations, finalizing a $39.7 billion spending package for the next two fiscal years. After extensive discussions between House and Senate leadership, the compromise version of House Bill 300 establishes the financial framework for state operations through mid-2027, authorizing nearly $20 billion per year.
The budget includes a roughly 4% increase from current spending levels. State tax collections will fund about $10.6 billion annually, with the remainder coming from bonds, federal funds and other sources.
The economic outlook surrounding this budget remains complex. Hawaii’s financial planners are keeping a close eye on potential shifts in federal funding under the Trump administration. Some legislators have even discussed the possibility of reconvening for a special session if significant federal cuts or new tariffs materially impact the state’s finances in the coming months.
Education remains a focal point of state spending. The budget directs $150 million toward addressing deferred maintenance at public schools and $42 million for summer educational programs. Additionally, it includes funding for a temporary elementary school in Lahaina to replace facilities destroyed in the devastating 2023 wildfire.
Health care investments feature prominently, with nearly $250 million earmarked for the Hawaii Health Systems Corporation and $450 million for a hospital sustainability fund. The state is also investing $30 million in healthcare workforce development through a loan repayment program designed to attract and retain medical professionals.
Infrastructure development receives substantial capital improvement funding, with $1.8 billion allocated for airport projects and $1.5 billion for highway improvements. Housing affordability, one of Hawaii’s most persistent challenges, will see $380 million in development funding to increase the supply of attainable housing options.
The University of Hawaii will receive $118 million to enhance student housing at its Manoa campus. Tourism infrastructure will benefit from $36 million for repairs and upgrades to the Hawaii Convention Center. Public safety initiatives include $30 million toward the eventual replacement of the aging Oahu Community Correctional Center, $10 million for enhancing the emergency siren system and $5.2 million specifically designated for enforcing fireworks regulations.
Capital improvement funding totals $3.4 billion for fiscal year 2026 and $2.3 billion for the following year. Bond financing will cover $1.4 billion in the first year and $423 million in the second year. These figures represent a scaling back from the current year’s $4.5 billion capital improvement budget.
The budget agreement emerged after months of deliberation. Following Gov. Josh Green’s initial proposal, the House approved its version in March, with the Senate making additional modifications in early April. Budget negotiators then worked through differences, including meeting during holidays, to craft the compromise.
The governor possesses line-item veto authority, allowing him to strike specific appropriations while approving the remainder of the budget.
Photo Courtesy
Daniel Ramirez via Wikimedia Commons
Creative Commons Attribution 2.0
