New growth forecast
puts cuts back on table

Lawmakers consider further
reductions of up to $60 million

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By Pat Omandam
pomandam@starbulletin.com

Just after the House balanced its version of the new two-year, $7.6 billion financial plan yesterday and sent it to the Senate, state lawmakers said they probably will have to come up with cuts or additional revenues of $30 million to $60 million.

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The Council on Revenues is expected to lower the state's projected revenue growth for the year by 1 or 2 percentage points today, creating the deficit in the budget.

House Democrats and Republicans debated the general fund budget, described as a "work in progress," for more than two hours before forwarding it to the Senate.

The Democratic majority argued the fiscal year 2004-2005 plan, based largely on recommendations by Republican Gov. Linda Lingle, is balanced by the administration's 5 percent across-the-board cut in education and social services.

Under the plan, the state Department of Education faces a $3 million cut in each of the next two years; the University of Hawaii a $3.2 million cut in each year.

"I think people need to know that the governor's cuts to the budget will have serious and great impacts to our education system and to the University of Hawaii," said Higher Education Chairman K. Mark Takai (D, Newtown-Waimalu).

House Health Chairman Dennis Arakaki (D, Kalihi Valley) added he has grave reservations about a budget that is "penny-wise and pound-foolish."

For example, he said, it cuts $4.4 million for school-based substance abuse treatment, prevention and intervention programs.

The proposed 2004 budget is $3.739 billion, or about $193 million more than the current $3.546 billion budget. Most of the increase is for $180 million in collective-bargaining costs. The 2005 budget is $3.866 billion.

House Finance Chairman Dwight Takamine explained the $7.605 billion budget outlined in House Bill 200, HD1, is about $14 million less than what the governor had proposed.

But to use that $14 million to restore cuts imposed on education would be irresponsible and dishonest, given today's anticipated downturn in the state revenue forecast and the possibility of a war with Iraq seriously affecting the state economy, he said.

"We have trimmed the fat, cut into the muscle and are now at the point of sawing the bone," Takamine said.

"The possibility of war may not allow us to restore the cuts made by the governor at this time, but should conditions change, your committee will be the first to suggest such restoration," he said.

Republicans, however, called the majority's take on the House budget nothing but political spin to make the new governor look bad.

State Rep. Kika Bukoski (R, Makawao) reminded lawmakers yesterday they were voting on the House draft of the state budget, and if Democrats did not like the cuts Lingle made to education in her executive budget, they could have restored it in their version, but they did not.

"Let's call a spade a spade," Bukoski said. "If you support this House draft, you're supporting the cuts."

Mark Moses (R, Kapolei), the ranking minority member on the House Finance Committee, objected to the way the House budget was put together, saying legislators did not have enough time to thoroughly review it.

Meanwhile, Human Services Chairman Michael Kahikina (D, Nanakuli) said if there is not enough money to provide for the social services safety net, then the Legislature should consider raising taxes.

He suggested the House hear a Senate-passed bill that calls for a 12.5 percent increase in the general excise tax, to 4.5 percent from 4 percent, which would generate an estimated $80 million for education.

But prior to the floor session, Takamine said it would not be wise to add to residents' tax burden if the state economy is drastically affected by war.