The state gave no “;defensible rationale”; for a cost-cutting plan that would have laid off nearly all of the workers in the Hawaii Film Office and key staff from other economic development offices, according to a legislative committee.

In a report released yesterday, the special House-Senate committee formed to examine proposed layoffs in the Department of Business, Economic Development and Tourism said the end result would be “;limited savings and the loss of considerable income to the state.”;

The report comes a month after the heads of the committee publicly censured department Director Ted Liu because of the plan.

“;We all know that the state needs to find ways to reduce expenses, but taking away from programs that represent a net gain to the state is clearly robbing Peter to pay Paul,”; Sen. Carol Fukunaga, charwoman of the Senate Committee on Economic Development and Taxation, said in a statement. “;Even after hearing from DBEDT, I am at a loss to explain how these decisions were made.”;

It was unclear how yesterday's announced contract agreement with the Hawaii Government Employees Association would affect the layoff plan for state agencies. Gov. Linda Lingle has said even with furloughs some layoffs may still be needed to close the growing budget deficit.

Liu was out of the state yesterday and unavailable for comment, the governor's office said.

In testimony to the committee last month, Liu defended the move saying 40 of 95 positions in his department had to be cut to help the state make up its budget deficit, which is approaching $1 billion through the current fiscal biennium.

The deepest cut would hit the film office, which would lose four out of five employees, although one-person offices such as the Community-Based Economic Development program, the Enterprise Zone/Partnership program and the Small Business Regulatory Review Board also would lose key people.

Liu had said the offices would continue operating as mandated by law, but with “;generalists”; handling multiple tasks instead of “;specialists”; in certain areas.

Proposed cuts in the film office attracted many who are involved in the industry to testify at the committee hearing on Sept. 3.

Officials noted that potential productions in the next year are estimated to generate revenue of up to $200 million.

“;Potential economic losses to the state would be enormous at a time that Hawaii continues to face revenue shortfalls for the foreseeable future,”; the committee report stated.