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Lingle's plan pushes financial woes onto future officials, legislator says


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POSTED: Wednesday, January 06, 2010

Gov. Linda Lingle's budget plan for the upcoming legislative session amounts to passing the buck and relying on future administrations to solve the state's financial woes, a key state lawmaker said.

“;This lame-duck administration is basically kicking the can down the road,”; said Rep. Marcus Oshiro, chairman of the House Finance Committee. “;They are not making any decisions on prioritizing government services.”;

Oshiro (D, Wahiawa-Poamoho) spoke yesterday after a briefing by Budget Director Georgina Kawamura on the administration's supplemental budget proposal that aims to close a $1.23 billion deficit over the next two fiscal years.

Among other means for making up the deficit for the 2010 fiscal year that ends June 30, Lingle has proposed delaying payment on several items, including income tax refunds, which would give the state an estimated $275 million.

Delaying the tax refunds does not require legislative approval, but it would leave a hole for the next administration to fill after Lingle leaves office this year.

“;That's a one-shot deal, but a prominent component of her getting out of this current fiscal year,”; Oshiro said. “;The question is, Do you continue that policy?”;

Kawamura said if lawmakers disagree with the administration's plan, that is their prerogative.

“;I guess he's entitled to his thoughts of how we're handling it, but I think we've proposed a reasonable financial plan and budget for them to consider,”; Kawamura said. “;Their responsibility in this process is they agree, or they disagree and they find the alternative means to provide the balanced budget and financial plan.”;

Lawmakers and the administration debated the best way to achieve that balance in such difficult economic times, with the most realistic options being tax hikes or steeper program cuts.

But targeting program cuts to help core services — which most agreed were education, human services and public safety — can have negative impacts, as well.

“;When we propose to take money from a smaller department to give to a larger department, that hit to the smaller department is tremendous for them,”; Kawamura said. “;To get $1 million out of Agriculture — that's a big hit when we want to give $1 million to Health and Human Services.”;

The budget director's testimony comes as the Legislature's money committees hear from all state agencies on their budget wishes for the upcoming session. Hearings continue until the start of the regular session Jan. 20.

Meanwhile yesterday, the money committees also heard from the state Council of Revenues on its forecast for the upcoming year.

Economists had encouraging comments for lawmakers, predicting that the recession for Hawaii seems to have bottomed out, and the economy should start showing signs of recovery with tourism coming back and rebounds in construction and housing.

But the recovery would be slow, they said.

“;That's good news,”; Oshiro said. “;Maybe the slide has stopped and the recovery, though being slow, is on its way.”;

Economists cautioned that the forecast always faces risks and that the current forecast of a 2.5 percent decline in revenue for the 2010 fiscal year could easily be wrong by up to 2 percentage points either way. Each percentage point equates to about $45 million in revenue.

“;Even with the best model, you're not going to predict an event like a 9/11,”; said council Chairman Paul Brewbaker. “;You need to be attentive to the ongoing presence of risks that just, out of the blue, could throw the plan off track.”;