Wednesday, February 17, 1999

More state
budget cuts loom

The Legislature is asking
most department chiefs to map
out budget cuts as great
as 10 percent

Legislature Directory

By Mike Yuen


Downsizing the public defender's office. Cuts to welfare programs. Less work contracted out.

Those are some of the cuts that Gov. Ben Cayetano's department chiefs say they would be forced to make if they have to slash their budgets further.

With state tax revenue collections looking less promising, House and Senate money committees have asked department heads to recommend budget cuts as deep as 10 percent.

1999 Hawaii State Legislature The House Finance Committee asked for 5 percent reductions, except for the Department of Education and the University of Hawaii, which were each asked to suggest cuts of 2 percent. Last week, the Senate Ways and Means told departments to look at two scenarios -- cuts of 5 percent and 10 percent.

"It's too early to say that there would be cuts," House Finance Chairman Dwight Takamine (D, Hilo) said yesterday. "But the signals aren't that great."

Takamine and other key lawmakers are concerned that the administration's financial assumptions, made late last year when the revenue picture was brighter, are now too optimistic.

They are also concerned that when the Council on Revenues meets next month, it could have a less optimistic view of the state's economy. The state's budget is required to be based on the council's projections.

Takamine and Carol Fukunaga (D, Makiki), Senate Ways and Means co-chairwoman, also believe the revenue picture doesn't look bright because Gov. Ben Cayetano's three proposals to generate additional revenues will have a tough time winning legislative approval.

The bills would establish a new tax on cars and trucks less than 10 years old based on their value; impose the 4 percent general excise tax on the sale of used cars by people who are not licensed dealers; and raise the surcharge on rental cars from $2 a day to $3. The initiatives are estimated to bring in about $120 million annually to the general fund.

"They're not popular taxes," Fukunaga said.

To reach the House Finance panel's 5 percent cut, Budget Director Earl Anzai said the public defender's office would have to be scaled back. It is attached to Anzai's department.

"I guess people would have to go to jail," Anzai said. He would have to lay off five people and make cuts to the public defender's office, Anzai added.

It is getting increasingly difficult to make cuts in his department, Anzai said, because it is responsible for paying the state's debt service and meeting the state's obligations to Social Security and the government health fund, all of which can't be cut. Nor can payments to court-appointed counsel be cut, he added.

"We don't have much flexibility left. We only have bodies, so it is hard to save money," Anzai said. It is reaching the point where the governor and lawmakers will have to decide what programs should remain rather than "just knocking a person here and a person there," he said.

The Human Services Department told the House that a 5 percent cut would mean slashing $26 million, requiring the elimination of entire programs, such as general assistance and aid to the blind and disabled.

"We requested that Finance consider a 5 percent reduction on nonmandated expenses, which would be $2.5 million," said Kate Stanley, Human Services deputy director. "However, we did not recommend even this cut." Nonmandated expenses would include administrative costs.

The department is asking that its budget be reduced no further, Stanley said. In 1996, for example, there was a 20 percent reduction in cash assistance to parents with dependent children.

"We believe the department has made all the cuts it can. We can't do more without eliminating the social safety net," said Stanley.

Labor Director Lorraine Akiba also said that a 5 percent cut would hurt her department.

Gordon Ing, Labor Department business management officer, said that in the last five years there has been a 47 percent decrease in the department's budget, from $29.2 million in general funds for fiscal 1994-95 to $15.6 million annually in the two-year period that begins July 1.

There has also been a 25 percent reduction in staffing, from 345 full-time positions to 260 full-time positions, Ing said.

What Labor is offering is to cut its purchase of services contracts, he said.

The department, Ing said, has only about $8 million budgeted for core programs -- occupational safety and health, disability compensation and labor law enforcement. Cuts would have to come from attached boards and commissions, he added.

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