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StarBulletin.com

State running out of time to fix budget


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POSTED: Wednesday, May 12, 2010

If you listen to Gov. Linda Lingle and the Democratic leadership of the state Legislature, one would have to believe that “;Kick the can”; is the Hawaii state game.

“;As I have said before, we cannot 'kick the can down the road' and just expect that everything will turn out OK,”; Lingle warned in a statewide Internet address last September.

Her speech was about impending layoffs, the state's fragile budget and the need to act now to save money.

As this year's legislative session drew to a close, it is a procrastinator's play book that both Lingle and the Legislature are reading and it is going to forever change how the state deals with voters and workers.

The Legislature in the final committee report on the budget said Lingle's budget consists of one-time solutions and quick fixes that pass off financial burdens to future years or simply ignore them altogether.

“;These costs include, among others, deferred payments, delayed tax rebates and not addressing rising Medicaid costs, restructuring debt and employee retirement system contributions,”; the committee said and then adopted much of that plan.

One can argue that the state is “;living on the float”; to balance the budget. The big ticket is the $275 million delay in paying owed income tax returns. There is a $44 million Medicaid shortfall carried over to fiscal 2011. And the Legislature estimates that the state may be short $2 million in electricity payments next year.

But wait, there's more.

Both the Legislature and the governor failed to do anything about the pension for state employees. Both talk about it, issue warnings and look concerned, but there's no action.

According to a report from the Pew Center on the States, Hawaii owns one of the greatest pension burdens: $10.8 billion.

The report said Hawaii needs an Annual Required Contribution of $488,770,000 for the state retirement system and an additional $822,454,000 for retiree health care.

The trouble came when the Legislature cut Employees' Retirement System funding in 2000 and 2001, coupled with the dismal investment returns of 2001 and 2002, according to the Pew report.

“;Hawaii failed to sock away any assets to cover this long-term bill coming due. Relative to its size and population, Hawaii has one of the greatest burdens of any state,”; the report warned.

State leaders now will have to find a longer road to kick the can down or start paying some major bills.