House OKs smaller budget
The state House has given its approval to a supplemental budget bill that cuts government spending by $67 million, or 1.3 percent, over the current biennium.
But that amount is likely to change after tomorrow, when the state Council on Revenues issues its quarterly forecast.
That new forecast will be used as the budget, House Bill 2500, moves through the Senate.
Lawmakers are not optimistic about the state's revenue picture improving.
"We must hope for the best but prepare for the worst," said House Finance Chairman Marcus Oshiro (D, Wahiawa-Poamoho).
After predicting revenue growth of 5.7 percent in August, the council revised that forecast to 4.9 percent in January, a difference of about $37 million.
Last week, Gov. Linda Lingle said preliminary figures from the state Tax Department indicated tax collections through the first eight months of the current fiscal year were up about 3 percent from last year.
Another downward forecast would likely mean more cuts and restrictions on government spending.
The supplemental budget already reduces the general fund operating budgets of most state departments by 4 percent.
While it does not create any new proposals, it continues to support basic needs in the areas of affordable housing, health and human services, environmental protection, renewable energy research and development, and repair and maintenance of facilities, such as schools, according to the committee report.
"This is an honest budget," Oshiro said. "It doesn't create false expectations or make empty promises."
Lingle had proposed a supplemental budget that increased general fund spending by 1.9 percent, about $100.2 million, saying she believed such spending was possible while still recognizing the slowing of the economy.
She said she would consider revenue growth of 4 percent to be healthy for the current fiscal year.
House Republicans raised some concerns over the budget proposal, but all voted in favor of the bill.
Rep. Colleen Meyer, the minority floor leader, said that while the revenue growth has been modest, state tax collections are increasing.
"We don't have a revenue problem moving forward -- growth rates are moderate but our revenues are growing," said Meyer (R, Laie-Kahuku). "We have a spending problem."
As one example, Meyer said the state could potentially save millions by enacting some type of medical malpractice or tort reform. Although the issue has been raised repeatedly, the legislation has traditionally died in committee.
Meyer said the state is spending $169 million in health premiums paid to the Hawaii Employer-Union Health Benefits Trust Fund for state employees' health benefits.
She argued that those premiums could be reduced if the state took steps to reduce medical malpractice premiums paid by doctors.
"This is a prime example of how legislation has fiscal consequences," Meyer said.