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StarBulletin.com

Deal is achievable for balanced budget during hard times


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POSTED: Friday, March 27, 2009

REPUBLICAN Gov. Linda Lingle and the Democratic Legislature are heading for a possible collision over how to carve a state budget out of the current fiscal crisis. Legislators are considering raising a variety of taxes to balance the budget while Lingle is calling for lowering state employees' wages. The two sides need to find common ground to minimize the economic strife.

The state has entered negotiations with public employee unions over her proposed lowering of wages and benefits during the next two years. The employees received sizeable pay raises ranging from 16.5 percent to 29.6 percent in the past four years so should be able to endure modest reductions during these hard times.

If the unions refuse any cuts, as they have promised, Lingle is threatening to lay off as many as 4,000 of the state's 49,000 employees. She noted that New York Gov. David A. Paterson plans to eliminate nearly 9,000 jobs after failing to get public unions' agreement to cost-cutting concessions.

Lingle proposes to balance the budget by cutting salaries by $278 million over the next two fiscal years. State salaries in the executive and judicial branches would be cut by comparable amounts.

“;I don't see the Legislature conceding the 36 percent increases they took, and it is patently unfair,”; said Randy Perreira, head of the Hawaii Government Employees Association. Legislators accepted the huge pay increase made by a commission controlled by legislative leaders at the beginning of this year.

Lingle has rejected the Legislature's plans to lay off some state workers and raise taxes. She also has ruled out furloughs - for example, having employees take a day off without pay every month.

Lingle's plan to strip $90 million from the state Department of Education's current budget and restoring it with future federal grants is risky. A spokeswoman for the U.S. Department of Education has said that money intended for stabilizing education but diverted by states to other purposes “;will affect their ability”; to obtain additional stabilization money.

Schools Superintendent Pat Hamamoto has said the diverting of education funds could force Hawaii's public schools to shut down on May 6, a month before the end of the normal school year. The issue should be clarified next week with the issuance of federal guidelines for the use of the education portion of stabilization grants.

Senate Ways and Means Chairwoman Donna Kim says Lingle at one point “;said everything was on the table, and now she says, 'No new taxes.'”; However, when asked in a Star-Bulletin editorial board meeting whether she would consider raising tobacco taxes, Lingle said she would not exclude the possibility. She said she is opposed to any increase in income or general excise taxes.

Nor does Lingle rule out a compromise. At the Star-Bulletin meeting, she noted that the California legislature and Gov. Arnold Schwarzenegger agreed to a budget after a three-month stalemate.