State legislators and Gov. Linda Lingle dug their heels deeper into a budget morass when lawmakers quickly dismissed her latest budget proposal and Lingle warned that by rejecting it they will take the rap for raising taxes and layoffs of public workers.
The hard lines are exactly the wrong way to attempt to piece together a workable financial plan, which should spread the burden of revenue shortfalls as much as possible.

Though there is little love lost between the Republican governor and the Democratic-led Legislature, the state's extraordinary budget problems demand reasonable conduct and compromise. Their political feuds are petty compared to the fiscal crisis confronting Hawaii.

The governor wants no tax increases and no layoffs, but wants public workers' pay and benefits reduced. However, with labor contracts yet to be settled and likely to remain so months after the end of the legislative session, Lingle told the Senate Ways and Means Committee that lawmakers should cut spending by $278 million — the amount by which she seeks to reduce pay and benefits — and trust her to work out the details.

No way, said legislators, who have enjoyed stalwart support of public employees unions and are averse to giving up their power to control spending. They contend that the amount of cuts Lingle wants to set suggests to unions a ceiling for labor costs and hampers negotiations.

Lingle argues that by agreeing to the figure, legislators recognize there has to be a decrease in labor costs in order to balance the books.

Public workers, who have received pay increases in better times, should be willing to take some cuts, at least until the economy improves, and there are indications that they would rather save jobs than see layoffs.

As matters now stand, the Senate will draft its budget, then reconcile it with the House's version, which would lay off 374 workers, cut spending and programs and increase taxes.

With the right mix of reductions in programs and spending, the state might be able to get through the next two years. Since Lingle is open to using some of the $185 million in the Hawaii Hurricane Relief Fund, legislators should review that option, too.

Raising the excise tax and the hotel room tax are still possibilities, but that should be the last recourse. With few segments of the economy unscathed, increases will hurt businesses as well as individuals.

State government is under tremendous financial pressure and it is incumbent upon legislators and the administration to work cooperatively.