Why Hawaii is scrambling to spend last of its federal COVID funds before end of 2024

Hawaii intends to spend $200 million in federal pandemic funds following concerns raised by the U.S. Treasury that the Aloha State had not fully committed to their use.

In 2021, Hawaii received $1.64 billion in federal aid to mitigate the impacts of COVID-19 and bolster economic recovery efforts. However, a September report from the feds revealed that only $1.44 billion had been earmarked for expenditure.

Sabrina Nasir, Deputy Director of Hawaii’s Department of Budget and Finance, explained that the state had until the end of the year to allocate the funds or risk returning them to the federal government.

“We are committed to utilizing the full award, and we are grateful to the federal government for this vital support,” Nasir confirmed.

The process involves the Hawaii Department of Budget and Finance submitting requests for Governor Josh Green (D), with subsequent review and approval by the governor’s office.

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“This particular allocation was directed to the governor’s office, and we are managing it on his behalf,” Nasir clarified. “This is standard practice across all states.”

The decision not to spend the remaining funds would have been contentious, particularly given Hawaii’s tourism-dependent economy, which continues to struggle in the aftermath of the devastating wildfires that ravaged Lahaina in August, eight months ago.

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How did Hawaii spend the money? 

According to the Department of Budget and Finance’s master project list, Hawaii’s most substantial project involved allocating $800 million to cover unemployment insurance benefits— a necessity after the state’s unemployment trust fund was depleted during the pandemic.

Other critical projects funded: substantial investments in homeless services, government operations, and operating subsidies for crucial entities such as the Department of Education, the University of Hawaii, and Hawaii State Hospital.

Sabrina Nasir highlighted the versatility afforded by the federal government, stating, “Something really beneficial from the federal government is the flexibility they’ve granted.”

“Many of these funds were already allocated before Governor Green took office, and numerous projects and programs were already in progress,” Nasir explained. “Should there be a need to reallocate funds, we would do so in alignment with statewide priorities determined by the governor.”

A modest $29.1 million was allocated for Maui wildfire recovery efforts, according to the state's Office on Budget and Finance. Although most of the funds were obligated before the wildfires struck Lahaina on Aug. 8, 2023, the state did have some flexibility in re-appropriating them later.

“Those funds can be redirected as needed,” Nasir said. “They do reach a redirect if the funds aren’t being spent promptly.”

The federal timeline required states to commit funds within four years (2024) and spend them within six years (2026).

Jeremy Yurow is a politics reporting fellow based in Hawaii for the USA TODAY Network. You can reach him at JYurow@gannett.com or on X, formerly Twitter @JeremyYurow.