Capitol View
THE memo from Gov. Ben Cayetano to state departments warned of dire times ahead. Governor’s warnings
seem familiarWe are running out of money, the governor said. We looked all around, checked all our accounts, inside drawers and behind the cushions, and yes, there is no more money.
After making everyone in government save and spend less, Cayetano is saying things are so tight we may just have to cut programs.
Beginning in the next fiscal year, Cayetano figures we will spend more than we make. How this came to be isn't clear from the memo. It may be partially because of Ben Cayetano.
The same fellow who last year constantly took credit for "the biggest tax cut in Hawaii's history" now says that "public demands have resulted in the recent enactment of various tax cuts."
The cure almost sounds like a page from Republican Linda Lingle's standard speech.
"We must address the underlying philosophy of government services and their costs in a more deliberate way," Cayetano says.
The reason for the review, he goes on, is to make sure the state operates within its means, make sure we are handling what is appropriate and that state programs are operating efficiently and effectively.
The Cayetano administration wrote a new memo for this, although some paper might have been saved by recycling a previous directive.
Back in 1995, newly elected Cayetano announced, "The Democrats have to reshape their philosophy."
In 1998, Cayetano announced that his Economic Revitalization Task Force would "restructure the economy and improve productivity.
"We must set a standard for evaluating government by how it serves the public...We must consolidate departments," he said almost two years ago.
Seven months ago, Cayetano again said it was time to "revamp" state government.
Although the directions in Cayetano's memo are vague, the problem is simple and direct: Hawaii spends more money then it takes in.
It does this a lot. Even during the last years of former Gov. John Waihee's administration, the state was spending more than it was collecting in taxes.
Of course, because Hawaii can't print money, if it cannot spend more than it has, it must either borrow or get the money from somewhere else.
EARLY on in his administration, Cayetano put up $200 million in construction funds to spur on the economy. Then before his re-election campaign, Cayetano convinced the Legislature to spend a billion more in construction money. All that was borrowed over a long time, like you would do with a home mortgage.
Then to keep the operating budget balanced, Cayetano and the Legislature started dipping into special accounts set up for other purposes.
As Lowell Kalapa, director of the Hawaii Tax Foundation, says, the "only reason we are still afloat is because of transfers from other funds."
At the same time that taxes are being cut, budgets are being slashed and Cayetano is again calling for revamping and reforming government, the real story is that the state carries a surplus on paper, while spending more than it makes.
"He keeps creating surpluses to make him look good at elections and then screams deficit the rest of the time," Kalapa says.
If the economy does not change, it is likely that soon Hawaii will have borrowed all it can and will simply have to acknowledge the truth. We just don't have any more money.
Richard Borreca reports on Hawaii's politics every Wednesday.
He can be reached by e-mail at rborreca@pixi.com