House panel OKs budget
that is less than Lingle seeks

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By Pat Omandam
pomandam@starbulletin.com

The state House Finance Committee has approved a two-year, $7.6 billion state general fund budget that is $14.3 million less than what Gov. Linda Lingle proposed.

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Even more cuts may be needed by the time it is up for final legislative approval in late April, said House Finance Chairman Dwight Takamine (D, North Kohala-South Hilo).

"At this point in time, we have identified $14 million in additional reductions to the governor's budget, which, in the past, we would have used to restore funding for essential services. That is not the case this year," Takamine said.

"There exists a great likelihood that the state's economy will get worse before it gets any better," he said.

The committee also approved a two-year, $220.1 million general fund budget for the state Judiciary and a $5 million biennial general fund budget for the Office of Hawaiian Affairs.

Before the vote, Republicans on the committee said they did not have enough time to review the state budget plan. They said that with a month and a half left in the session, changes can be expected.

"Clearly, the budget is a work in progress," said state Rep. Mark Moses (R, Kapolei).

All three budget bills must be voted on by the full House by March 18 so they can be sent to the Senate by March 20. The Senate will then have until April 25 to come up with its budget plan before going into conference committee negotiations with the House. Conferees then would come up with a version to be voted on by the entire Legislature.

The House state budget is for $3.7 billion in fiscal 2004, about $200 million above the current $3.5 billion fiscal 2003 budget. The proposed fiscal 2005 budget is $3.9 billion.

Takamine said yesterday that the two-year, $7.6 billion plan is based on January's projected 6.1 percent growth in state revenue from the state Council on Revenues. He said the council may likely lower those projections later this month in anticipation of a U.S. war against Iraq.

"The biggest threat to our immediate economic future clearly is the crisis in the Middle East. Sept. 11 (2001), as well as the Gulf War of 1991, has illustrated the economic devastation that always accompanies a situation like the one we are heading towards," he said.

Takamine said the House state budget does not use any money from the $187 million Hawaii Hurricane Relief Fund, which the Senate and Lingle have refused to use.

It also excludes the seven emergency funding requests totaling $36 million that are pending before the Legislature. Those include general fund requests of $1 million for the Governor's Office and $2 million that is part of a $12.3 million state payment of undisputed revenues to OHA.

In anticipation of a budget shortfall, the Senate approved SB 1626, which calls for a 12.5 percent increase in the general excise tax, this week. It would raise the tax to 4.5 percent from 4 percent, which would generate an estimated $80 million that could be used for education. Residents would be given a $100 food tax credit to offset the tax. But the measure must first gain the approval of the House and the governor, who has pledged not to raises taxes to balance the budget.