Statement from Sen. Jude Hofschneider on budget

A Responsible Budget and a Commitment to Recovery:

The Senate’s proposed Fiscal Year 2027 budget reflects a difficult reality: the Commonwealth must continue providing essential services, but it cannot responsibly promise spending that projected revenues may not support.

I ask our public employees, retirees, families, and businesses for patience and understanding as we work through these decisions. I know that reduced hours and uncertain funding affect household budgets and plans for the future. We do not take that hardship lightly.

Our fiscal challenges did not arise overnight. Over the past four years, limited economic activity and unforeseen storms have slowed recovery across our islands. Our tourism market has also faced a changing environment shaped by the effects of the global pandemic and national policy changes. These circumstances have affected the pace at which visitors and investment have returned—and, in turn, the revenues available to fund government services.

As chairman of the Senate Fiscal Affairs Committee, I believe we owe the public an honest account of what the budget can support today. The House version called for a 64-hour pay period, yet it provided approximately $32.3 million for payroll—an amount our review found would cover roughly 38 hours per pay period. Funding the additional 26 hours would require an estimated $21.8 million.

The Senate has worked to narrow that gap. Our proposal adds funding to support an estimated 53-hour pay period and restores positions left unfunded in the House version. That remains short of what our employees need. But mandating 64 hours without identifying the money to pay for them would create uncertainty for the very people we intend to help.

Education is another urgent concern. Following candid discussions with Public School System leadership and the Board of Education, the Senate’s proposal allocates $25,609,338 to PSS. It designates $16,177,027.52 to support a 64-hour pay period during the first two quarters of the fiscal year and calls for timely monthly allotments.

This gives PSS time to pursue available federal support for teacher payroll and make the internal decisions needed for the rest of the year. Funding for the third and fourth quarters remains unresolved. Our teachers, school staff, students, and parents deserve clarity about that challenge and our commitment to address it.

The Senate proposal seeks to identify and reserve possible funding for PSS, retiree pensions, personnel payroll, and other priority needs. We have also proposed increasing the maximum nonrefundable education tax credit for qualifying PSS donations in FY 2027 from $5,000 to $10,000. If that provision cannot be included in the budget, I support pursuing it through separate legislation.

Passing a workable budget is only one part of our responsibility. We must continue working with the House, the administration, businesses, and our federal partners to improve revenue collections and create conditions for sustained economic activity. We must look for practical ways to support tourism, encourage investment, and broaden the opportunities that allow our people and businesses to prosper. As additional funds are realized and lawfully appropriated, we should revisit the needs of employees, schools, retirees, and essential services.

The Senate received the House budget with only nine days to complete its review. I am grateful to my colleagues, our staff, PSS leadership, and our partners in government for working through difficult questions under that deadline. More discussions with departments and agencies, and further reconciliation of the numbers, remain necessary.

I ask the people of the Commonwealth to bear with us as that work continues. Our immediate goal is to prevent a government shutdown. Our longer commitment is to keep seeking ways to strengthen revenue and support a recovery that reaches families and communities throughout our islands. We will continue that work with honesty, urgency, and an open mind.

Si Yu'us ma'ase.