New government A new governor and a new state Legislature face an old, familiar problem: where to find money to make up for a shortfall in tax revenues.
faces old money woes
All eyes are on how the
governor and lawmakers
tackle looming shortfallsBy Pat Omandam
pomandam@starbulletin.comJust how well Hawaii copes with the shortfall depends largely on the bipartisan relationship that develops this spring between Republican Gov. Linda Lingle and the Democratic-controlled Legislature.
"So far, it's been pretty cordial," said Scott Saiki (D, McCully), House majority leader.
But that may not last as the governor casts her first impressions on the state's two-year plan.
Lingle plans to control costs and cut spending without using the $187 million in the Hawaii Hurricane Relief Fund. She has vowed not to lay off any state workers, but will impose a hiring freeze and a spending restriction on state agencies.
Lingle will also review all capital improvement projects that are in the planning stage, while projects ready for construction will be accelerated.
"Over the past month we've gotten a good handle on the current budget and what we're facing going forward," Lingle said yesterday. "We're now putting everything on the table and taking a hard look at what's being spent, where the money is going and how efficiently and wisely we're using our limited resources."
Lingle also wants to exempt medical services and rent from the state general excise tax, proposals the Democratic majority of the state Legislature has rejected repeatedly in past years. Public worker unions say they want legislators to find alternative sources of state revenue if that tax money is taken away.
And lawmakers, especially in the state House, remain open to using the hurricane fund, especially after they skimmed $29 million in interest from it last year to help balance the budget.
Randy Perreira, deputy executive director of the Hawaii Government Employees Association, said these and other economic issues will come into play when the session opens Jan. 15. But for now, he said, everyone is cautiously watching what they say.
"I think there's a honeymoon right now, and it remains to be seen how long that honeymoon would last," Perreira said. "I think a lot of it depends on the package of bills that the governor sends down and what kinds of issues she tries to force through or push for."
The state will have a clearer economic picture when the state Council on Revenues issues its January and March revenue forecasts. But as it stands, Hawaii faces about a $347 million budget shortfall in the proposed two-year state budget submitted by the Cayetano administration.
That budget, which uses the $187 million from the hurricane fund, still has a shortfall of $160 million, based on current projected revenue growth. The fund, suspended in December 2001, raised money from homeowners to help make insurance available after Hurricane Iniki in 1992.
Compounding the state's fiscal dilemma are upcoming collective-bargaining talks to pay for new public worker union contracts that are or will be in negotiation this year.
Also, the counties will press Lingle, a former Maui mayor, for more home-rule and fiscal authority. Lingle said she might consider returning to the counties a portion of the money the state collects in traffic fines.
Finally, the state Office of Hawaiian Affairs launches a major lobbying effort this session for the return of millions of dollars in ceded-land revenue payments, after a Hawaii Supreme Court ruling in September 2001 voided a state law that defined those payments.
Already, Lingle wants to return $10.3 million in undisputed ceded-land revenue to OHA, but needs legislative approval to do that.
"To me there's been a shift in the political paradigm, and therein lies opportunity for native Hawaiian issues," said Haunani Apoliona, OHA chairwoman.
Lingle has had preliminary talks with legislative budget leaders on the state's financial plan. Her main goal is to not only put together a balanced 2004-2005 state budget, but one that also balances in a six-year state financial plan, as required by law.
To that end, Lingle said last month she will not dwell on any issues this session where there is strong opposition from legislators.
"We will focus on things that we feel we can accomplish," she said.
That is just as well, noted state Sen. Willie Espero (D, Ewa Beach), who said Lingle may have to change some of her fiscal views because the money is not there.
"She's going to have to make changes to the governor's budget, but she's going to also have to work with the numbers that are available to her," said Espero, vice chairman of the Senate Transportation, Military Affairs and Government Operations Committee. "So, some of her issues or promises may be possible, some may not be."
