State spending
to increase 11.9%

GOP legislators say
the budget is too high
as it heads to a vote

By Bruce Dunford
Associated Press

To the Legislature's Republican minority leaders, it's simple math. You can't keep increasing the cost of state government faster than the islands' economy grows to pay for it.

To Gov. Ben Cayetano, these are extraordinary times with extraordinary needs.

Lawmakers this week vote on, and in all likelihood will approve, a two-year, $14.6 billion operating budget. In the fiscal year beginning July 1, it pushes total state spending, including federal and special funds, up more than 10 percent over the current fiscal year.

The general fund budget, which represents about half of the total and is paid primarily through general excise and use taxes and personal and corporate income taxes, jumps to $4.474 billion in the coming fiscal year from $3.104 billion in the current fiscal year, an increase of 11.9 percent.

Lawmakers earmarked $3.629 billion for the second year of the budget, a 4.5 percent increase over the first year, but likely will add money in next year's legislative session.

"It shows Democrats love spending," said Rep. Galen Fox (R, Waikiki-Ala Wai), the House minority leader. "They are spending too much. They should be returning the money to the people in the form of reduced taxes so we can stimulate the economy."

If state spending keeps increasing 10 percent each year, it would double state spending in just seven years, he said.

"They should be trying to hold down spending in line with inflation and population growth, both of which are very limited at present," Fox said. "We should be trying to get our economy out of an economic trough that it has been stuck in."

Fox's counterpart in the Senate, Sen. Sam Slom (R, Hawaii Kai-Aina Haina), echoes his concern.

"We've added more public employees. We've added more costs," Slom said. "We can't continue growing government at the rate of 11 percent because the economy is not matching that. The private-sector income and revenue is not matching that."

"When you're talking about an overall growth rate of the gross state product of 1 or 2 percent, you can't do that. You can't sustain that, and you're fooling yourself if you think so," he said.

Slom said Hawaii's Democrats should follow the lead of the previous national administration to cut the size of government to stimulate the national economy.

"It's been mastered by a Democratic president, Bill Clinton, who was able to reduce the size of federal government to where it was under President Kennedy," he said.

Cayetano pins the growth in the state budget on recent public employee pay raises and the Felix consent decree, which requires hundreds of millions of dollars in new spending on health and education services for Hawaii's children with behavioral problems.

"You need to take a look at where it's going to happen. It's mostly happening in education because of Felix," he said. "If you look at the growth in all the other departments, it's not that significant."

"Over the past six years, we've cut all the other departments, except for the (Department of Education)," he said. "So you need to take a look at where the growth is going to occur."

Cayetano lamented that he did not get a lot of the things he wanted in the budget, including more computers and textbooks for public schools, more drug treatment funding and dental health for the adult needy.

"We lost our textbooks and computers. The irony of it all: On one hand, the teachers have been talking about needing these things for years, and we give them a pay raise, and the pay raise costs us that opportunity," he said.

Budget conferees say the growth was the result of increasing fixed costs, including contributions to the state workers' health fund, debt on state building projects, pension payments, Social Security and Medicare payments, and Felix.

These items added $279.5 million in the first year and $406.7 million in the second year.

Pay raises, including those won by teachers after a 19-day strike, will cost the state an additional $110 million in the first year, $213 million more in the second year and $227 million in the 2003-2004 fiscal year, according to the budget conference report.

The budget conferees cut Cayetano's $1 billion request for state building projects in half but earmarked $143 million for repair and improvements at public schools.

Slom is not sure if the continued growth in state spending by the Democratic-controlled Legislature and administration will have a consequence in next year's elections.

"For the foreseeable present, people I think here in Hawaii don't equate the financial damage with what it means to them in the future, and they'd much rather look at the individuals and the personalities involved, and I think that's still how it's going to be," he said.

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State of Hawaii