Cuts to state Department of Education adult education, less generous high-tech tax credits and a reallocation of $24 million in special funds will balance the state budget, says Gov. Linda Lingle.
Gov vows not to raise taxes
or raid the hurricane fund
Her budget plan would cut adultHouse OKs extra office funds
education and tech tax credits
By Richard Borreca
No new taxes would be needed and the state will not touch either the hurricane relief fund or the rainy day fund, Lingle promised in a news conference yesterday.
The state's original budget, proposed by former Gov. Ben Cayetano before he left office, called for the state to spend the hurricane relief fund to provide for extra spending.
Since then, Lingle has called for a partial hiring freeze and reductions of up to 5 percent in state operating expenses.
But a new Council on Revenues forecast on March 14 said state revenues would decline by $118 million during the next two years because of generous high-tech tax credits.
In response, Lingle said she wants the Legislature to redraft the tax-credit legislation, especially the so-called Act 221 credits.
"Anybody that is an investor in technology companies shouldn't be very concerned about this, if their investment is truly to create more jobs," Lingle said. "When we make these changes, we will continue to be able to attract investment, and they will still be the most generous credits in the nation."
The specifics of Lingle's plan call for moving $24 million in special funds to the general fund: $8 million in the compliance resolution fund and $10 million from the dwelling unit revolving fund, and moving $6 million from a program to stop falling rocks to fund a construction project.
The plan also would gain $50.8 million by restructuring the state's bond debt, which means spreading the bonds over a longer period. This would lower the interest payments but extend the term of the bond and result in a reduced interest rate.
The adjustments to Act 221 would result in a $55.5 million savings, and the Department of Education adult education cuts would save $2.7 million.
Lingle said the state is now offering classes in karaoke singing and country line dancing, which she said "are not core functions of government."
Other adult education programs, such as English as a Second Language, would be kept, but "there would be charges for persons who could afford to pay," Lingle said.
Sen. Brian Taniguchi, Ways and Means Committee chairman, said the governor's suggestions would be considered, but he didn't commit to adopting any of them. Taniguchi (D, Moiliili, Manoa) said he is still working on his own plan to raise the state excise tax to 4.5 percent from 4 percent to balance the budget.
"We are still trying to keep as many options open as possible," Taniguchi said. "Hopefully everyone will keep a cool head."
Lingle, meanwhile, repeated her pledge that she would not tap the hurricane fund to balance the budget.
"My financial plan does not include taking any money from the hurricane relief fund," Lingle said.
Instead, Lingle warned, if the Legislature doesn't consider her plan, the alternative would be to cut existing programs.
"Failure to make adjustment will guarantee substantial program cuts," Lingle said.
Office of the Governor
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After originally cutting about half of a $1 million emergency funding request for the offices of the governor and lieutenant governor, House lawmakers agreed yesterday to changes made by the Senate that would restore most of the money.
House OKs more funds
for governor’s office
Gov. Linda Lingle had called House members "childish" after they approved a bill providing only $508,000 to run the offices from January through the June 30 end of the fiscal year.
Included in the emergency appropriations was $93,500 Lingle had sought to buy furniture for the recently completed living quarters for Hawaii's governors, located on the grounds of Washington Place.
The emergency funds were needed because the state budget approved by lawmakers last May didn't include funding for the second half of the fiscal year, although former Gov. Ben Cayetano left enough money behind to carry Lingle's office through March.
House Finance Chairman Dwight Takamine had said that in a tough economy and with public education taking multimillion-dollar cuts, the reduction was appropriate.
But Senate lawmakers last week amended the bill, House Bill 1077, House Draft 1, Senate Draft 1, to provide Lingle $838,136 to run her office through June 30. Lingle has said she can make do with that amount.
Senate President Robert Bunda said the Senate's proposal was based on an agreement from House Speaker Calvin Say to restore the funding to an amount close to Lingle's request so the measure could be expedited for a vote.
House lawmakers agreed to the changes and unanimously passed the measure on final reading yesterday. It now goes to the governor.
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