$90M drop in revenue expected


POSTED: Thursday, May 28, 2009

Lawmakers are expecting that the state Council on Revenues will forecast today an additional $90 million drop in state revenues.

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The projections by the panel of economists are used to calculate how much money the state will collect in taxes, which determines how much it can spend.

The current projection, which the council made in March, had the state taking in 5 percent less than it did last year. Lawmakers expect that to be lowered to 7 percent, which translates into a revenue decrease of about $90 million.

The declining revenues are already reflected in state budget cuts. The Department of Education, for instance, said it has cut $39 million from its budget.

“;The effect of the biennium cuts on services and programs will be apparent once the 2009-2010 school year begins,”; said Sandy Goya, Department of Education communications director.

Rep. Marcus Oshiro, House Finance Committee chairman, said today's council action is likely to leave the state budget with little extra.

Oshiro predicted that Gov. Linda Lingle will have to further reduce the budget for both public schools and colleges.

“;She should be OK, but there will have to be further budget cuts,”; Oshiro said.

“;The pressure will be on her,”; he said.

Public employee union leaders also are bracing for today's expected cuts because of the effect on collective bargaining.

Randy Perreira, Hawaii Government Employees Association executive director, said he expects the council to report some stability in spending but that projected income tax collections will be lower, because more residents are unemployed or working fewer hours.

Perreira criticized Lingle for continuing to cut the budget, saying the state would be better off accepting tax increases as a way to get more revenue.