Cooperative effort is needed to spread budget pain evenly


POSTED: Friday, March 06, 2009

EVEN as the governor and lawmakers pull up the sofa cushions to hunt every nickel and dime to fill the state's budget gap, lean revenues likely will widen the financial puka further.

Short of a miracle, a report due next week is expected to estimate weaker tax collections and other receipts as an increasingly feeble economy continues to stumble.

Though political tendencies have legislators and Gov. Linda Lingle at odds over how to get through the fiscal crisis, they would be remiss if they did not find a way to moderate the effects of the budget shortfall.

To do this, Democratic lawmakers and the Republican governor should resist the blame game and portraying each other as the bad guy while making necessary cuts in programs and services. The dire situation requires intelligent choices, sensible consideration of long-term consequences and refusing quick fixes.

Taxpayers, businesses and public employees also will have to accept some measure of hardship if the state is to withstand the economic storm.

Lingle had been waiting for a forecast from the state Council on Revenues before presenting budget plans to the Legislature, but delivered her proposal after grousing from Senate and House leaders about the delay in guidance.

The governor intends to use $320 million in federal stimulus funds pegged for Medicaid reimbursements to make up almost half of the $650 million budget deficit, freeing state funds for other needs.

Lingle wants to take 14 percent of tobacco settlement cash and another $33 million in a tobacco tax fund that's supposed to go to the Cancer Research Center, which would damage Hawaii's hopes for a job-creating enterprise that would also benefit patients. Businesses would have to pay general excise taxes earlier, while high-tech tax credits would be reduced by half.

Lingle's proposal eliminates government-funded life insurance for employees, raises the retirement age for public workers and increases their health insurance payments. Legislators, who have steadfastly protected public employees from the budget knife, should revive bills that would allow some changes to their benefits package.

Lawmakers predictably found the plan wanting, but are correct in noting that the stimulus funds are a one-time-only grant and will not help the state make up future shortfalls.

While they stepped around discussion of tax increases, the governor, who earlier said she would consider all budget-cutting ideas, now says increases are off the table. However, having raided almost all available reserves and special funds, there are few alternatives. Residents could see their taxes inch up.