Legislators may also want to ponder increasing the 4 percent general excise tax or the personal income tax, says House Finance chairman Calvin Say (D, Palolo).
Say offered those options yesterday as the Council on Revenues significantly lowered the state's tax revenue projections for the next two fiscal years - $116 million in the first year, which starts July 1, and $159.5 million in the following year.
Say, who had ordered his staff to look for ways to cut $90 million to $150 million from the budget in anticipation of a lower revenue projection, said the forecast was worse than expected.
But Gov. Ben Cayetano said he believes the council's projections are too grim, particularly since tax revenues for the first eight months of the current fiscal year are running 0.8 percent ahead of the 1.2 percent growth that the panel of top economists is forecasting. "The law allows us to develop our own projections, so we're going to take a look at that," he said.
"I'm not thinking of cutting anything. Unless we begin to cut things like education, there's not much left to be cut. And we're not going to cut education," Cayetano asserted last night, following a Cabinet meeting to discuss the council's forecast.
Senate President Norman Mizuguchi (D, Aiea), who huddled behind closed doors with the Senate money panel's co-chairwomen, said his chamber is asking state departments and agencies for their cooperation in making further cuts.
"I also have been in touch with Speaker (Joe) Souki, who has indicated that the House will help in facilitating budget negotiations," Mizuguchi stated. "My hope is that by working collaboratively with the governor and the House, we can keep disruptions to government operations and people's lives to a minimum."
But Mizuguchi did not cite specific areas that might be prime candidates for the budget ax.
Say did. The lower revenue projections, Say said, threatens the administration's $10 million emergency appropriation for tourism promotion and the $110 million for temporary assistance to the needy over the biennium.
Say said his panel will also be looking closely at various programs in the Department of Business, Economic Development and Tourism.
Another way to curb spending is to furlough state workers, Say suggested, or cut their pay raises.
If state workers get pay raises, it may not be by percentages but by flat amounts, allocated from what might be available, Say said.
At this point, Say added, he doesn't see strong support among the 39 Democrats in the 51-member House for an increase in the 4 percent general excise tax or the personal income tax.
"Politically, I don't think most of the (members) want to raise taxes," Say said. "It would probably be counterproductive to the economic growth of the state."
Like Cayetano, Say said the Department of Education should be spared budget cuts.
The House has increased the Department of Education's budget to handle enrollment increases.
Rep. Barbara Marumoto of Waialae Iki, a senior Republican member of the House Finance Committee, said even with the budget crunch, she believes the state should fund collective-bargaining agreements and implement tax cuts that could stimulate the economy.
Paul Brewbaker, Council on Revenues chairman, said the lowered revenue projection is due to a virtually nonexistent rate of inflation and a slowing of visitors from Japan because the yen is now weak when exchanged with the U.S. dollar.