The Budget Committee on Wednesday heard the Department of Human Resources present its proposed fiscal year 2026 operating budget of $8,662,835 and an associated CIP design request, with Director Nolan Miyazaki detailing hiring gains, remaining vacancies and the department’s limited authority to offer retention pay.

The presentation matters because DHR runs the city’s classification, recruitment and hiring programs; staffing and pay design choices affect service delivery across Honolulu’s departments and the city’s ability to compete for scarce workers in construction, planning and public safety.

DHR’s FY26 operating request is funded entirely from general funds. Miyazaki told the committee that salaries make up roughly 90% of the department’s budget: $7,927,626 in salaries and $730,209 in current‑expense requests. The department is proposing three new civil‑service positions for outreach and talent acquisition (replacing federally funded contract roles), one new civil‑service position for employee training and retention support, and a net reduction in contract positions. DHR also requested $400,000 in CIP design funds for reconfiguring office floor layout and improving electronic data capabilities to accommodate additional staff.

Miyazaki said the department’s recruitment work has shown recent progress: a February 1 snapshot recorded seven vacancies, six of which DHR expected to fill by July 1, 2025, with the last vacancy covered in FY26 because of an employee’s return rights. Over the prior 12 months, the department handled 26 vacancies, filled 19 and made a net gain of 19 hires, he said. DHR budgeted $37,000 for overtime primarily to staff large‑scale exams and hiring events.

Committee members pressed DHR about sticking points in recruiting and retaining skilled positions. The director said DHR recently approved a shortage differential for planner positions specific to the Department of Planning and Permitting and that a shortage differential for construction inspectors had already been applied; such differentials are applied to an entire job class when DHR can document persistent difficulty filling positions. “The department’s objectives are to attract, hire and retain the best qualified civil servants to provide competent and impartial service to the public,” Miyazaki said, adding the shortage policy is an internal director’s policy used as a recruitment incentive and must be applied across a whole class.

Members asked about the city’s ability to use recruitment or retention incentives. Miyazaki said recruitment incentives can be implemented more flexibly (and DHR has been turning them around quickly), but retention pay is constrained by collective bargaining and the city’s obligation to maintain equal pay for equal work. He described recruitment incentives that can be tied to qualifications and a department’s paperwork demonstrating the class is hard to fill. He also said DHR is pushing to speed internal processes — noting average hiring for some events is now about 42 days from posting to start — and is pursuing better system integration and AI tools to reduce manual reporting work.

Council member Kiana Kehaina raised the committee’s concern about federal employees displaced by recent federal workforce reductions and urged DHR to pursue targeted outreach and matchmaking. “I do know that there is a lot of trauma, emotional trauma going on because they’re in shock,” Kehaina said, urging coordination with agencies and the congressional delegation to find placement opportunities. Miyazaki said DHR has done targeted matching before (including for Hawaiian Airlines employees) and is open to more strategic outreach, and he offered to provide the committee with the statutory and regulatory framework that undergirds the department’s shortage policy.

Other clarifications from the hearing: DHR staff said (1) pay for incumbents is governed largely by collective bargaining once people are on a schedule, (2) shortage differentials require documentation that a job class is hard to fill and are not the same as reclassification, and (3) “same‑day hires” have generally been used for lower‑skill office assistant positions that can be screened and hired quickly.

The committee requested follow‑up materials including the written shortage policy, the statutory/regulatory authority DHR relies on for recruitment incentives, and a list of job classes and examples of positions used for same‑day hiring. Miyazaki said staff would provide those materials as a follow up to the committee.

For now, the budget presentation concluded with no formal committee vote on the DHR budget; the item will be considered as part of the larger FY26 budget process.