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Bad News For The Budget: Maui Fire Costs Could Top $600 Million This Year Alone

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Bad News For The Budget: Maui Fire Costs Could Top $600 Million This Year Alone

Feb 20, 2024 | 8:35 am ET
By Kevin Dayton/Civil Beat
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Lawmakers are trying to get a grip on how much the state has spent on the recovery effort, and how that will affect the state budget. (Nathan Eagle/Civil Beat/2024)
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Lawmakers are trying to get a grip on how much the state has spent on the recovery effort, and how that will affect the state budget. (Nathan Eagle/Civil Beat/2024)

The state is racking up about $1 million per day in costs to shelter Maui fire survivors, and concerns are mounting that it may not get as much federal reimbursement as expected. That has lawmakers scrambling to determine just how much the recovery will cost.

Senate Ways and Means Committee Chairman Donovan Dela Cruz told his colleagues in a memo last week the state’s share of the recovery effort this year alone may amount to $600 million, which is the sum Gov. Josh Green had earmarked in his financial plan for the Maui recovery during the next four years.

Dela Cruz warned in the memo that it is unclear how much of that money will be reimbursed by the Federal Emergency Management Agency. “There may still be additional expenses that the State must pay upfront that are still being calculated,” he wrote.

House Speaker Scott Saiki agreed, and then some. “There are a lot of questions that still have not been resolved or answered. My inclination is that we will probably be looking at north of $700 million for Maui expenses this year,” he said Monday in an interview.

The state must also budget for hundreds of millions of dollars in hazard pay that is still owed to state workers from the pandemic, Saiki said, adding that the combined cost of hazard pay and the upfront wildfire recovery costs this year may top $1 billion.

To put that in perspective, the Green administration projected in December the entire state executive branch would spend about $10.53 billion from the general treasury in the fiscal year that begins July 1. 

Saiki said he does not know yet if those extra costs will require deep budget cuts to existing state programs because the numbers change daily. But he said they will certainly make it difficult to fund any new initiatives.

The Lahaina fire was the deadliest U.S. wildfire in more than a century, killing at least 101 people and uprooting thousands who lost their homes in that Aug. 8 blaze as well as a smaller number in Upcountry.

Lawmakers will publicly discuss Maui wildfire recovery costs at a 9:30 a.m. briefing at the Capitol on Tuesday focused on Senate Bill 3068 and Senate Bill 582. Both bills are emergency appropriation measures designed to cover near-term wildfire expenses in this fiscal year.

Closed-Door Meeting

Dela Cruz did not respond to requests for comment. However, state Budget Director Luis Salaveria told lawmakers on Feb. 9 that the immediate costs of the Maui wildfire response are expected to exceed the $199 million the administration has deposited in the Major Disaster Fund.

“The State is working to maximize FEMA reimbursements, however, issues have arisen over what costs are FEMA eligible, and the timeline in which the State will be reimbursed for eligible costs is currently not clear,” Salaveria said in written testimony.

It was always understood the state would need to cover much of the cost of temporary housing for fire survivors up front, but the Green administration anticipated some 90% of that cost would be reimbursed by FEMA.

Members of the Ways and Means Committee gathered Friday with Green administration officials for a closed-door meeting at the Capitol on the fiscal implications of the Maui fire, and a lawmaker who attended the meeting said FEMA has been rejecting large numbers of claims for reimbursement.

The lawmaker, who provided details on condition of anonymity, said some senators signaled that some departments need to prepare plans to cut their budgets if the state runs out of money.

‘Costs Evolve Daily’

Green declined a request for an interview, but said in a statement that his administration would “do all that we can within our power to maximize federal support as we deal with the Maui wildfires.”

“This is a long-term recovery effort where costs evolve daily as we continue to provide resources like food, shelter, clothing, schools and transportation to thousands of people so that society doesn’t breakdown on Maui,” he wrote.

The governor also said he would meet with several Biden Cabinet members in Washington, D.C., this week “to secure additional funding to reduce the impact to our state budget.”

A major issue raised by Dela Cruz in his memo was the number of West Maui residents who are considered “noneligible FEMA households,” and are costing the state $1,000 per day per household.

“With roughly 1,000 households that the State is currently responsible for, this equates to $1,000,000 a day,” according to the memo, which was also signed by Ways and Means Committee Vice Chairwoman Sharon Moriwaki. “Investments in short and long-term infrastructure are needed to house our residents or continue to pay $1,000,000 or more per day for non-congregate shelters.”

The FEMA direct lease program and state rental assistance program are far less expensive options for displaced households, according to the memo.

“It is our understanding that with the State rental assistance program, the average rate is currently around $150 a day, resulting in savings to the State of $850 every day,” the senators wrote.

“Unfortunately, we are unsure if the County of Maui’s housing efforts will have enough inventory available before FEMA is scheduled to leave in February 2025,” according to the memo. “To meet this deadline, we must look at housing options available across all of Maui to house Lahaina residents until they can rebuild their homes.”

Preparing For FEMA’s Departure

Some families have declined housing that has been offered outside of West Maui, and the memo opined that “should housing options not be in West Maui, we will also have to ensure that people housed outside of West Maui have support services to continue their daily activities such as transportation services to school and work.”

Saiki said a “large chunk” of the $700 million in Maui costs he expects will be incurred by the state this year will be housing costs that FEMA will not cover, “especially at the hotel level.”

“I hope I’m wrong on the $700 million, but that’s just my inclination,” he said.

Among the concerns discussed at the closed-door session was that various state departments may be using their own funds to help with the Maui response. Dela Cruz addressed that issue in his memo, explaining it is unclear to lawmakers what the departments spent, or whether that spending is eligible for federal reimbursement.

To address those uncertainties, the Green administration issued guidance on Feb. 8 that “FEMA ineligible expenditures” now require the governor’s approval, according to the Ways and Means memo.

Civil Beat’s coverage of Maui County is supported in part by grants from the Nuestro Futuro Foundation.