Public hearing tonight
on state revenue shortfall

It is the first of a series by the state
Legislature's 2 budget committees

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By Pat Omandam
pomandam@starbulletin.com

The public will get its first chance tonight to tell lawmakers how the state should deal with a projected $315 million revenue shortfall over the next two years.

The Legislature's two budget committees begin a series of four statewide hearings tonight in Honolulu.

The hearing starts at 7 p.m. at the state Capitol auditorium. The other hearings are Jan. 3 on Hawaii, Jan. 7 on Kauai and Jan. 9 on Maui.

They also will start at 7 p.m., at locations yet to be announced.

State legislators were briefed recently on how Gov. Ben Cayetano wants to address the shortfall, but they have not seen the administration's entire plan to update the state's fiscal 2002 budget.

The state Council on Revenue's next economic forecast, on Jan. 10, is likely to be a key indicator of the direction and tone of the session.

"I think all we've received is a basic heads-up on what was the projected shortfall and how the governor wants to make up some of that money," said Senate Vice President Colleen Hanabusa (D, Waianae), vice chairwoman of the Senate Ways and Means Committee.

House Finance Chairman Dwight Takamine (D, Hamakua) said the aftermath of Sept. 11 virtually guarantees there will be significant cuts made to the existing budget during the next legislation session.

As it stands, the state forecasts a loss of $152 million in revenue this current fiscal year and $163 million in fiscal year 2003.

Already on the table for discussion is an across-the-board 1 percent cut for all state agencies for fiscal year 2002, and a 2 percent cut the following year.

Cayetano is also suggesting:

>> Deferral of the state's pension contributions to the Employees' Retirement System.

>> Transferring the $213 million balance from the Hawaii Hurricane Relief Fund to the general fund.

>> Doubling the liquor tax.

>> Using a $900 million capital construction budget to stimulate the economy.

"Exactly where the public thinks the cuts should be made is what we need to hear," Takamine said.

Senate Ways and Means Chairman Brian Taniguchi (D, Manoa) said these are difficult times, but "we as a community must have general agreement as to where spending can be reduced or eliminated, so that we can get the state moving forward again."

Hanabusa said she believes public attention will focus on the use of the hurricane fund money and on gambling to balance the budget. She said she expects testimony will come from homeowners who want to get reimbursed from the fund, as well as from lobbyists who will try to make their point that the state needs gambling revenue to help it out.

Neither is an option for state Rep. Charles Djou (R, Kaneohe), a member of the House Finance Committee. But that does not mean they will not be seriously discussed by the Legislature, he said.

That is because gambling becomes an attractive option if legislators are not willing to reform government, said Djou, who believes lawmakers may leave the issue of gambling to Hawaii voters as a ballot question next fall.

"Prior to Sept. 11, I thought the 2002 Legislature would be a quiet one," Djou said. "But Sept. 11 has changed everything, and because of this budget deficit, we'll have a very serious session, and we've got to make difficult choices."