Revised projections expected to shuffle budget

Maui lawmakers say Lingle budget solution premature

The Maui News
Friday, March 6, 2009

By CHRIS HAMILTON, Staff Writer

WAILUKU - Maui's senior state senator said Thursday that Gov. Linda Lingle should wait and see what Hawaii's budget forecasts will be next week before she declares that she had a victorious solution to the state's deficit.

On Wednesday, Lingle announced a plan to bridge the current $650 million budget gap by using a combination of cuts to state worker benefits, an influx of new federal dollars and transfers of money from special funds for the fiscal years that begin July 1 and end in mid-2011.

Lingle said that her plan contains no tax or fee hikes and avoids layoffs and furloughs of state employees.

However, Sen. Roz Baker, who represents West and South Maui residents, said Lingle was premature in making the announcement since the state Council on Revenues could issue a projection next week that could force a reduction in state expenditures by an additional $400 million.

Baker's reservations were shared by other members of Maui County's all-Democrat delegation. Those contacted Thursday either called the Republican governor's announcement flawed or just a start. At least two state representatives said Lingle should consider tax hikes.

Lingle talked about her plan Wednesday after returning from Washington, D.C., where she met with Obama administration officials on the impact of the federal economic stimulus bill.

"We expect the Council on Revenues will give us some additional bad news," Baker said. "The other issue I have is that I don't believe the governor is being completely honest with the people. For instance, the federal stimulus money will be coming over nine quarters while Lingle's press release seems to say it will come all at once."

Freshman state Rep. Gil Keith-Agaran, who represents Central Maui, called Lingle's plan "a starting point, but it likely falls short of balancing the budget in a way that provides a foundation for sustainable economic growth."

Keith-Agaran said he's not sure if Lingle can realistically avoid impacts to necessary public services and the social safety net without considering additional tax revenues.

"It's admirable, except since it comes out a week before the next projections, it may be the shortest-lived proposal in history," said Sen. J. Kalani English, whose district includes Upcountry, East Maui, Lanai and Molokai. "It's a waste of the paper that it's printed on."

Lingle acknowledged her proposal could be significantly disrupted by the upcoming budget forecast, but she said she cannot support raising taxes. Her plan for fiscal years 2009-10 and 2010-11 hinges on the $320 million the federal economic stimulus measure offers for state Medicaid costs that would be applied to the budget shortfall.

Her proposal includes infusing the state's general fund with $14 million in tobacco lawsuit settlement funds, $33 million in tobacco tax revenues, $38 million from interest earned on some special funds, $40 million in money generated by advancing the date that businesses must pay general excise taxes and $44 million by reducing the tax credit for investments in Hawaii-based technology firms.

"I think what she did was good; and we were looking at almost the same things, too," said Rep. Joe Souki, who represents residents of Kahakuloa, Wailuku and Waikapu. "At this time, though, we don't want to be taking away any (state employee) benefits if we can, like the life insurance. On some items, we'll have some differences, but it's a good work in progress at this point."

Keith-Agaran called taking away worker benefits shortsighted. Such a solution could lead to experienced state employees retiring this year and leave the state with less assistance on basic services.

Baker said the measures unfairly target government workers and will have the opposite effect of stimulating the economy. She also dismissed Lingle's idea to cut cancer research funding, especially since Hawaii's population is aging.

South Maui Rep. Joe Bertram III said lawmakers don't have enough details yet on the federal stimulus package to be making such important decisions. He said he would rather see the state fix the deficit by perhaps raising the general excise or personal income tax.

"I think if we want to make some true cuts we should repeal mandatory minimum prison terms," Bertram said.

* Chris Hamilton can be reached at chamilton@mauinews.com.

Original article URL: http://www.mauinews.com/page/content.detail/id/515724.html

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