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Lingle pulls back on scope of state's budget gap


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POSTED: Monday, July 13, 2009

There is no doubt that Hawaii has to deal with a deep budget hole, but the numbers might not be quite as devastating as thought just a few days ago.

Gov. Linda Lingle's administration now estimates the state's deficit through the next two years totals as little as $744 million, far less than the $900 million gap she warned the state could face Wednesday.

Much of the red ink will likely be paid by public workers through layoffs or furloughs and pay cuts negotiated with labor unions.

Lingle called for a meeting today with the United Public Workers and the Hawaii Government Employees Association after a judge ruled her furlough plan was illegal because she had not negotiated with the unions.

“;We worked hard on the (furlough) plan. We think its a good one,”; she said during the weekend. “;We want to sit down and hear if the unions have a better idea of how to implement the furlough plan.”;

Though Lingle plans to appeal the ruling, she said she wanted to start talks about furloughs.

Her office is also compiling a list of employees to lay off if furloughs are not instated. She did not send the notice to unions last week as planned, but decided to wait until after today's meeting.

Lingle called layoffs “;a very cumbersome, difficult process”; that does not necessarily favor taxpayers.

Each $1 million from the state budget pays for about 14 employees' wages and benefits—roughly $71,000 per employee, according to the Lingle administration's layoff math.

Officially, Lingle is reporting a gap of $786 million, but that does not account for $42 million in anticipated savings she will get from her plan to cut funding from a low-income adult health program.

When those savings are subtracted, the $744 million shortage represents a net increase of $15 million this week from the $729 million budget deficit she estimated after the Council on Revenues revised the state's economic forecast at the end of May.

Lingle claimed Wednesday that Hawaii lost an additional $30 million this month because she could not enact furloughs, but her staff acknowledged later that a failure to save money does not increase the shortfall by that amount.

The Republican governor's initial figures were also inflated because she had expected tax revenue figures to drop off by as much as $150 million instead of a much smaller $57 million actual total reported later Wednesday.

The state Tax Department said its efforts in June to increase collections through a tax amnesty program and the settlement of two large tax cases resulted in the lower number.

 

The Star-Bulletin staff contributed to this report.