Lingle's deficit strategy troubles lawmakers


POSTED: Thursday, January 29, 2009

State lawmakers fear that Gov. Linda Lingle's plan to drain nearly all the money from the state's rainy day fund to balance this year's budget will leave Hawaii unable to meet next year's projected deficits.




Lingle's ideas

        How Gov. Linda Lingle plans to meet a $75 million budget deficit:

  » Take an additional $20 million (a total of $60 million) from the rainy day fund.


» Add $31 million in more federal Medicaid reimbursements.


» Take $14 million from the Public Utilities Commission Special Fund and the Unclaimed Property Trust Fund.


» Save $16 million by restricting discretionary spending.


Lingle sent the House and Senate budget committee leaders a letter yesterday from Budget Director Georgina Kawamura detailing how the state will meet the projected $75 million budget shortfall for fiscal 2009, which ends June 30.

Administration officials came up with $81 million in additional revenue or cuts to more than offset the deficit.

Kawamura said the state would increase its rainy day fund withdrawal by $20 million to $60 million. The fund has an estimated $74 million now.

But Rep. Marcus Oshiro, House Finance Committee chairman, said the current Lingle budget plan leaves the state vulnerable if tax projections continue to drop.

“;This ends up with a $5.4 million carryover for the budget. What happens in March if the Council on Revenue lowers the projections 1 percentage point?”; Oshiro asks. “;That's $45 million.”;

Subtracting that $45 million from the $5.4 billion budget balance gives the state an additional $40 million deficit for next year. Current budget projections have the state running a $315.4 million deficit for fiscal 2010. If nothing is done, the fiscal 2011 deficit is calculated to grow to $549.8 million.

  ;  The state cannot legally operate with a budget deficit, so Lingle, Oshiro and Sen. Donna Mercado Kim, Senate Ways and Means Committee chairwoman, all say the budget will have to be drastically cut.

“;We are waiting for her revised financial plan. We had a briefing last week, and we didn't get much out of it,”; Oshiro said.

“;If she chooses not to provide leadership in this area, I will assume it,”; Oshiro said, noting that the state budget presented by Lingle is first rewritten by the House and then passed to the Senate.

Kim was equally blunt when reacting to Lingle's new budget plan. She said Lingle is just postponing the difficult decisions.

“;This flies in the face of the governor's statements that we should not be pushing this off into the future,”; Kim said.

“;I am not trying to place blame, but you have to be accountable for your actions in the past and your actions led us to this position. This administration has to step up and take responsibility for where we are and, and the Legislature as well,”; Kim said.

According to Kim, meetings between Lingle and the legislators have not been helpful.

“;We have been meeting and working with them, but they certainly have not come up with any concrete alternatives other than taking the rainy day money,”; Kim said.

Budget Director Kawamura wrote to the two lawmakers to explain that besides the rainy day fund transfer, the state is projecting to get an additional $31 million in additional federal reimbursements for Medicaid.

Also, the Public Utilities Commission Special Fund and the state Unclaimed Property Trust Fund are expected to put in a combined total of $14 million.

Finally, Kawamura said Lingle would restrict the state budget on discretionary spending by 2 percent, for a savings of $16 million. Lingle has already ordered a 4 percent restriction.

Kawamura, however, was not able to say specifically how Lingle would meet the deficits for the next two years. Lingle has said she would propose some reduction in state workers' salaries or furlough workers, but said she would not make her plans public until she had talked to the four county mayors and the public unions.