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State revenues to tumble lower


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POSTED: Friday, May 29, 2009

State government, already reeling from five months of budget cuts, now has to come up with more than $600 million more in funding to balance its books.

               

     

 

COMING UP SHORT

        Projections by the state Council on Revenues yesterday mean the state will have $612 million less by fiscal year 2011. Here are the deficits each fiscal year:
       

$185.7M
        2009

       

$207.7M
        2010

       

$218.1M
        2011

       

 

       

And Gov. Linda Lingle says she will tell the public at 1 p.m. Monday on television, radio and a webcast about the options to take care of the shortfall.

Projections by the state Council on Revenues yesterday mean the state will have $185.7 million less in this fiscal year, $207.7 million less in 2010 and $218.1 million less in the 2011 fiscal year, according to the legislative finance committees. Meanwhile, Lingle's office came up with a $685 million figure for the fiscal years.

The shortfall came yesterday afternoon when the council voted to again lower its tax collection forecast.

The council started the year saying the state would take in 3 percent less in the current fiscal year, ending June 30, than last fiscal year. The revenue prediction was cut again in March to 5 percent less and lowered again yesterday to minus 9 percent. And the council changed the growth rate for fiscal 2010 from 0.5 percent to no growth.

State officials were quick to voice concern.

Lingle said in a statement last night: “;Although last week I instructed all state departments to reduce discretionary spending by 2 percent on top of earlier budget restrictions of 6 percent, this will not be enough to cover the $185.6 million shortfall between now and June 30, 2009.

“;I will be meeting tomorrow and throughout the weekend with my staff to identify options to close the immediate shortfall projected by the Council on Revenues, as well as our projected $500 million shortfall in the fiscal 2010-2011 budget period hat begins July 1.”;

;[Preview]  Revenue Projections Raises Concerns For Hawaii Residents
 

The Council on Revenue forecasts the government will have more than a half a billion dollars less to spend in the next three years.

Watch ]

 

Rep. Marcus Oshiro, chairman of the House Finance Committee, said the cut will translate into fewer services for public school and college students and for the poor and frail.

Oshiro and Sen. Donna Mercado Kim, Senate Ways and Means Committee chairwoman, said Gov. Linda Lingle will have to take steps to cut spending.

“;She (Lingle) will have to make hard and difficult choices, maybe canceling contracts, canceling purchase orders and then imposing some plan of furloughs or pay reductions,”; said Oshiro (D, Wahiawa-Poamoho).

Kim (D, Kalihi Valley-Halawa) said Lingle needs to bear down in her talks with the public employee unions. So far, Kim said, Lingle has not been able to negotiate a contract that provides any labor savings.

Already state officials are pleading that their programs not be cut.

Garrett Toguchi, state Board of Education chairman, issued a statement, saying state schools saw their budgets cut $40 million in the 2009 fiscal year and that things will be worse in the next biennium.

“;Schools are preparing for an additional $166 million in cuts,”; he said.

Toguchi said the state should use the $180 million in the Hurricane Relief Fund and tap the Rainy Day Fund to preserve essential services such as education.

The drop in revenue came because the economists on the Council on Revenues said their forecasts have consistently been more optimistic than the reality of tax collections.

Paul Brewbaker, council chairman, said, “;At some point we need to embrace the pain,”; as he argued to lower the tax collection prediction to minus 10 percent.