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Cayetano’s
budget boosts
social spending

His proposal increases funding
for programs in public assistance,
health, corrections and higher ed

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By Pat Omandam
Star-Bulletin

Calling it a "socially responsive plan sensitive to the needs of our state," Gov. Ben Cayetano has submitted his budget for the next two years to state lawmakers .

The $16.3 billion budget, which covers state spending for the two-year period beginning July 1, shows a 13.3 percent ($418.7 million) spending increase next year to pay for programs in public assistance, health, corrections and higher education -- areas where funding was either deferred or reduced over the last five years.

"It was a decade of austerity marked by repeated and cumulative reductions to government programs and services," Cayetano said yesterday.

The budget does not include pay raises for state workers, which Cayetano says would mean cuts in state programs.

The governor's budget will be scrutinized and reworked in the House, and then the Senate, before the Legislature returns a final state budget to him for approval. Cayetano has publicly discussed portions of his budget over the past month.

Tax rebate or credit needed

State Budget Director Neal Miyahira said the Legislature also must provide for a tax refund or tax credit this year because general fund balances in the last two fiscal years exceeded 5 percent of the general fund revenues.

Although state economic estimates from the last quarter of 2000 show the Hawaii economy recovering, Cayetano said fixed costs still amount to about 80 percent of the state's general fund spending.

Still, he has placed a priority in his budget on legal settlements and court-mandated obligations like the Felix Consent Decree, which will cost the state $719 million and more over the next two years, he said.

Cayetano is also proposing the state spend $49 million to upgrade the state's information technology system, with another $27.5 million in computers for public schools.

But these same dollars, the governor warned, are in direct competition with public worker pay raises. Cayetano said an optimistic forecast for continued economic growth in Hawaii isn't enough to cover the raises the unions are demanding.

"I think it's really important that people understand is that we have offered a pay raise to the union," Cayetano said last week. "It's not like we're saying no pay raises at all."

Miyahira said $14.8 billion of the $16.3 billion budget is for government operations and the rest is for construction. The budget was based on the state Council on Revenue's September 2000 projections. State law requires the governor to submit a six-year balanced budget, Miyahira said.

"At this time, there is no anticipated need for the administration to submit proposals to raise additional revenues," he said.

House Speaker Calvin Say (D, Palolo) has suggested casino gambling to pay for long-term health care insurance.

Meanwhile, of the more than one billion dollars in capital improvements and construction, Cayetano is proposing to issue state bonds of $141 million for a new University of Hawaii medical school, $50 million (plus another $20 million in matching private funds) to build an aquarium in Kakaako, $10 million to get matching federal funds to renovate Kuhio Park Terrace and $6.5 million for a children's residential facility for the juvenile sex offender program, which now is housed in Pearl City and has drawn complaints from area residents.

Cayetano said his administration will continue to use public resources in ways that benefit the majority of citizens.

"When my administration took office nearly six years ago, the state was regularly spending more each year than it collected. The scope and cost of state government increased to unprecedented levels, presenting us with the worst fiscal crisis in the history of our state," Cayetano said.

How it breaks down Here are some of the priorities in Gov. Ben Cayetano's 2002-2003 executive budget, which he sent to state lawmakers yesterday: State debt service and entitlements: $550 million for debt service on general obligation bonds, property insurance, and state retirement and health fund costs. Felix Consent Decree: $196 million to meet court-ordered and consent decree requirements to provide mental health and special education services to eligible children. Medicaid related: $163.2 million for prescription drug cost increases, nursing home waiver programs and federal increases and adjustments for Medicaid-related programs. Statewide information system: $49 million for state information technology improvements. Computers: $27.5 million for computers in public schools to lower student-to-computer ratio to 4:1 from 6:1. State Hospital: $22.6 million for U.S. Department of Justice settlement costs to create community-based services for individuals discharged or diverted from Hawaii State Hospital. Another $20 million will subsidize the Hawaii Hospital Systems Corp. Prisons: $8.8 million for increased costs to house inmates out-of-state and $13.2 million to lease federal bed space at the new federal prison near Honolulu Airport. Library: $3.1 million for staff and books at Kapolei Public Library, which will open next year, as well as $12 million in construction for phase two of the regional library. Outgoing administration: $2.9 million in fiscal year 2003 to pay for vacation credits of outgoing cabinet members and other appointed officials. Waiahole Ditch: $700,000 for the State Water Commission to re-do portions of the Waiahole Ditch contested case hearing. Lifeguard: $500,000 for lifeguard services at Ke'e Beach on Kauai. Rain man: $213,039 for a state drought coordinator position and a drought mitigation program.

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