With our near-term economic expectation overtaken by COVID-19, it’s good to know that Hawaiʻi has some reserves to help address our health and economic security needs. Foremost among these is the Emergency Budget Reserve fund, also known as the “rainy day fund.” As of 2019, the balance in the fund was $376 million. While this is a big improvement over what was in the fund heading into the Great Recession a dozen years ago, it’s still equivalent to only 3 percent of the state’s operating costs.
According to statute, the legislature can’t appropriate more than 50 percent of the fund balance in a single fiscal year. Only the following purposes can be supported:
- Programs essential to public health, safety, and welfare;
- Counter-cyclical economic and employment programs, i.e., economic stimulus;
- Restoration of facilities damaged by a disaster; or to
- Address emergencies that have been declared by the governor or legislature.
In order to use the reserves, two-thirds of each house of the legislature needs to pass a bill that describes the emergency purpose and amount of money to be spent. Presumably when the legislature is able to get back to business, we’ll hear more about how and when these funds will be deployed.
Hurricane Relief Fund
Hawaiʻi’s Hurricane Relief Fund was established to cope with hurricane damage not adequately covered by insurance. During the Great Recession, the state tapped the fund to help end teacher furloughs and supplement the general fund. The $165 million borrowed then was repaid, and the fund now has a balance of $186.7 million.
The Unemployment Insurance Trust had a $569 million reserve at the end of 2019. That amounts to about three times the annual pay-outs over the past several years. These funds now can help cover the sudden steep increase in unemployment claims.
The state also has a reserve amounting to $300 million for Temporary Aid to Needy Families (TANF). The reserve is aimed at helping very low income families by paying for an array of needs, including household supplies, emergency housing, utilities, cash support and other crisis-related expenses. Hawaiʻi provides the same benefits to low-income families who don’t meet federal eligibility criteria, like immigrants and COFA migrants, but the reserve can’t be used for their needs. Now is the time to use the TANF reserve for federally-eligible families and other emergency funds for similar low-income families, who need help more than ever.