Budget basics: three common questions and their answers

The Hawaiʻi Budget and Policy Center was created to shed light on the state budget and make it accessible to the public. To that end, we created a budget primer, available for download here, which breaks down the different elements of the state’s guiding financial document and walks newcomers through the process by which it is created. Here, we answer three basic questions to get readers acquainted with this critical road map to governance.

What is the State Budget?

Think of the state budget as a spending plan for the state based on the amount of available money it has collected through taxes and other means. The budget reflects the priorities and values of the state. It addresses the spending needs of the executive branch, the judicial branch, the legislative branch, and the Office of Hawaiian Affairs (a unique and independent, fourth branch of government).

The executive branch needs 99 percent of the total state budget to pay for the programs and services managed by its 17 administrative departments (like the Department of Education or the Department of Land and Natural Resources), the University of Hawaiʻi system, and the governor’s and lieutenant governor’s offices. The other three independent branches of government require much smaller amounts of money to fulfill their missions and meet their obligations to the public.

Who Decides the Budget?

The short answer is the Legislature does. This is part of our system of checks and balances. The legislative branch controls the money given to the executive branch to carry out the directives outlined in laws passed by the Legislature and signed by the governor.

Each of our four branches of government provides a proposed budget for what it needs to spend in order to function properly and expand its capacity to serve the public. The executive and judicial branches, and the Office of Hawaiian Affairs, submit proposals to the Legislature during the legislative session. The session takes place between mid-January and the beginning of May. The Legislature considers, amends, and appropriates funds for these budgets, and comes up with its own. Once the Legislature has checked the figures and made sure that the total budget does not exceed the available revenue, it passes the budget as a bill and hands it to the governor to sign, just like any other measure.

The Legislature also appropriates funds to meet other priority needs through grants-in-aid and specific appropriations bills. Members of the Legislature introduce these appropriations bills during the legislative session, and non-governmental organizations (NGOs) submit grant-in-aid proposals for consideration by the Legislature at around the same time.

The legislative session provides the public the most information and the best opportunity to express opinions about state-supported programs, operating budgets and other bills that affect appropriations and revenues, such as tax increases or cuts.

What is a Fiscal Year/Biennium Budget?

When politicians talk about the budget, they often use terms like “fiscal year” and “biennium.” These are jargon words that help describe the timeline the state has constructed to approve and execute its spending plan. For the State of Hawaiʻi, each fiscal year (FY) begins on July 1 and ends on June 30 of the following year. Each fiscal year is referred to by the calendar year of its end date. For example, the current fiscal year—which began on July 1, 2018, and will end on June 30, 2019—is referred to as FY2019.

Hawaiʻi’s government operations are based on a fiscal biennium budget. This just means that each proposed budget covers two fiscal years. Fiscal biennium 2017–2019 (FB17–19) covers fiscal years 2018 and 2019, spanning July 1, 2017, to June 30, 2019. Each budget details the spending plan, and the revenues that support it, for a given biennium period.

Hawaiʻi FY2019 Budget Vital Statistics

Operating and Capital Projects:

• Executive: $16.8 billion

• Judiciary: $185 million

• Legislative: $42 million

• Office of Hawaiian Affairs: $9 million

Grants in Aid: $30 million

Appropriation Bills: $481 million

Total Budget: $17.5 billion

Permanent Positions: 48,222
Temporary Positions: 4,067

Source: HBPC analysis of FY2019 budget worksheets and appropriations bills, 2018 session