Reality bites the budget in hard times
Remember back in the days when Hawaii was fat and happy? Slip back three years to the 2005 economic times.
Hawaii was doing just marvelous, thank you. Even the usually dour Hawaii Tax Foundation had to acknowledge that the state was on fire.
"With increased visitor arrivals and a more robust Hawaii economy, revenues increased 16 percent between fiscal 2004 and 2005," the foundation noted in its annual report.
That was the year when salary increases for public employees amounted to $654 million, according to the foundation.
Every year, the base number grows and every two years the percentage increase grows. Bankers call this the magic of compounding; governors and budget committee chairs call it something else.
The cost spiral is halted only two ways: You stop spending money or you stop paying people. Government can do neither, so the balancing act becomes more dicey.
Asked about the state's budget deficit, which is now projected at almost $1 billion by the middle of 2010, Gov. Linda Lingle says Hawaii's economy is still growing, but the budget cannot continue to expand.
This kind of a condition is just quicksand for politicians. Former Gov. John Waihee will forever be typecast as a big spending Democrat after a $500 million surplus was used up during his administration and the state under Gov. Ben Cayetano had to cut back services to make the budget.
Chopping means unions won't get as much. Cayetano jaw-boned the public unions into changing the pay period and also delaying pay raises for a year.
Lingle is now signaling that she won't even enter into negotiations for pay raises. She says the unions will have to wait a year before even starting to talk about a wage increase.
That scenario is possible, but even it will not be enough to stop the compounding juggernaut that is the state government.
The real issue is how the state predicts funds into the future.
As Lingle said last week, it is easy to go from a period of growth to a period of stagnation, but still be liable for paying workers like the good times were still flowing.
"When revenues are coming in at 16 percent, you don't need to prioritize as strictly as you do when it is only one percent," Lingle candidly said.
Handling this, Lingle said, isn't "rocket science, we are simply not taking in as much money as we were."
The next year will show if Lingle and the Legislature can turn off Hawaii's spigot when the money stops flowing.