The state’s $21 billion budget over the next two fiscal years was signed by Gov. Josh Green Friday, ensuring Hawaii’s historic tax breaks for all but the highest-earning residents.

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The budget also funds most of the recommendations for how to spend $129 million in new climate fees — paid mostly by tourists — and increases state funding for SNAP, Medicaid and Affordable Care Act benefits that were cut by the Trump Administration.

“The budget ends up being a reflection of our priorities, plus deals with the realities that came with the federal government’s decreased resources,” Green told the Honolulu Star- Advertiser. “We’re very satisfied that the Legislature did a strong job giving us a balanced budget that maintains the tax breaks, which is super important. The tax breaks for working families survived completely and that’s a good thing.”

At the start of the last legislation session in January, Green proposed repealing tax cuts from 2027 to 2031 to preserve $1.8 billion in state revenue over several years — and to help the state make up for federal funding cuts to Hawaii programs.

But legislators looked for other savings that included tapping into state special funds, cutting state positions with the longest vacancies and by eliminating several industry tax credit programs.

After the Legislature adjourned on May 8, the Council on Revenues then issued a forecast that the general fund would receive over $100 million more compared with the council’s previous forecast in March — or $9.8 billion compared to $9.7 billion.

Its rosier economic impact was driven by dramatically higher prices for gas and electricity triggered by the war in Iran started by the United States and Israel on Feb. 28. Grocery prices have also continued to rise.

This year’s updated economic outlook was welcomed after Green cut $110 million from the state budget bill in July 2025 when the Council on Revenues forecast was lowered after the Legislature adjourned in May 2025.

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The result means that lower income earners will now see their state taxes go down even a bit lower than expected while legislators created a new bracket for the highest earners.

The budget calls for $10.42 billion in spending for the 2026 fiscal year and $10.63 for fiscal year 2027.

Green said the Legislature and his administration agreed on priorities that “underscores why I didn’t have to line item veto items this year because we were more fiscally aligned than we have been in probably decades. We’re focused on housing and lowering taxes and addressing social challenges in Hawaii.”

Notably, the budget provides $146 million for planning, design and construction of a new King Kamehameha III Elementary School in Lahaina that was destroyed during the Aug. 8, 2023, Maui wildfires; $16.5 million to make up for higher premiums to pay for Affordable Care Act coverage “that were otherwise erased by the federal government;” and $129 million for so-called green fee projects, including $5.7 million for the Hawaii wildfire risk reduction program and $14.1 million for “native ecosystems,” such as restoration of coral reefs, marine environments and to pay for”sustainable tourism,” Green said.

He called the approval of 70% of the recommendations made by the volunteer green fee advisory committee “a big victory” from the legislative perspective.

The Legislature sent Green 267 bills for his consideration and he intends to sign 264 of them into law.

“I didn’t have to dive into the budget and do line item vetoes because we worked all of that out in advance,” he said. “There were tough decisions because of pressure on SNAP and the Affordable Care Act that we decided we better create some resources these couple years.”

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