Budget woes spur The lower balance in the state budget projected by Gov. Linda Lingle's administration could hurt Hawaii's bond rating, some legislators fear. However, Lingle, who was already planning to discuss Hawaii's finances with bond rating services when she goes to the East Coast in two weeks, says the state's dropping reserves are manageable.
concern for isle bonds
But Lingle says the state’s
lower balance remains manageableBy Richard Borreca
rborreca@starbulletin.comAt the beginning of the month, Lingle projected the state would have an ending balance of $73.5 million in fiscal year 2003, which ends June 30, and $48.8 million in fiscal year 2004, which ends June 30, 2004.
But in a meeting with senators Wednesday, state Budget Director Georgina Kawamura said budget projections have since dropped. The administration now predicts an ending balance of $67.5 million for fiscal year 2003 and $26.2 million for fiscal year 2004.
Former Gov. Ben Cayetano had projected $13.1 million in carry-over funds for 2003 and $78.6 million for 2004.
"It is in the range we predicted," Lingle said yesterday. "We are not surprised at all, and it should not come as a surprise to anyone who has been following the budget."
But Senate President Robert Bunda (D, Wahiawa-North Shore) worries that the drop between Lingle's two projections might cause problems.
"There is concern that while balancing the budget, the numbers may appear to be such that it would cause alarm to those who rate our bonds," Bunda said. "There is concern that a lack of revenue would change those numbers and change them drastically."
Senate Ways and Means Chairman Brian Taniguchi echoed Bunda's concerns.
While praising Kawamura's presentation and noting that the former Maui budget director was "impressive" in her knowledge of state finances, Taniguchi (D, Manoa) said portions of Kawamura's presentation caused concern.
"I was a little disappointed that her budget is structured so there isn't going to be a lot of money for education or to restore more for higher education," Taniguchi said.
"So people who are thinking they are going to do all these great things in education -- we actually aren't adding any money; actually, we are going to do with less," he said.
The decline in the budget balance is due to Lingle agreeing to release more state departments from the mandatory 5 percent spending reduction imposed by her administration.
She argues that the balance is manageable and will satisfy state bond rating firms. Hawaii now has an AA bond rating.
"We will be meeting with the agencies on Feb. 26, and I expect they will feel very good about the steps we have taken to restore fiscal discipline to Hawaii," Lingle said in an informal meeting with reporters at the state Capitol.
"I have worked with them for eight years, and I know the kind of things they are interested in," Lingle said.
"What they want to know is if there is someone at the top who is communicating to the departments, the public and the Legislature that these are uncertain times and it is not the time to be taking on large amounts of recurring expenses," she said.
"I think they will be very happy, and I expect Hawaii's bonds to continue to be highly rated."
She repeated her promise not to use the $180 million in the state Hurricane Relief Fund to balance the budget.
"I have cautioned everyone it is not a time for big salary increases," she said. "It is a time to be more creative and leverage our resources."
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