On Politics
BY RICHARD BORRECA
Big, bad budget blues
If children now entering the fourth grade were inclined to read news stories about the state budget, they would never have known anything but bad news.
For the past nine years, the closest thing Hawaii has had to good economic news has been some predictions that times were just about to get better.
The first bearer of bad news was former Gov. Ben Cayetano, who opened up his two four-year terms by announcing that hundreds of state workers faced layoffs and hundreds of vacant positions would be eliminated. The Department of Education slashed 300 positions and another 11 state programs were cut.
But by 1998, the state was able to close the books with a carryover balance of $154 million.
Since then, the news has continued to turn sour. The state budget balance is down to a micro-margin estimated by some to be less than $10 million. At the same time, the state has bragged that it had tossed out the biggest tax cuts of any state in the nation.
Tax cuts were all the rage across the nation during the go-go period of the 1990s, when most states operated with soaring budgets.
The stock market boomed, high-tech investments were the way to early retirement bonanzas and states were chopping taxes while at the same time starting new programs and passing around pay raises.
Now for last three years, the stock market has been down and unemployment has risen. Today, Hawaii isn't alone in its fiscal woes, all the states are reporting serious problems meeting their budgets.
A news analysis of the budget crisis by the Pew Center on the States, a research organization, suggests that the problem is divided into those who think states spent too much and those who think states cut taxes too much. If the states had been able to hold on to their money, they would now be able to weather the current economic problems; and if the states had not cut their ability to raise money, they would never have gotten into their present fix, the experts figure.
Hawaii's government has yet to venture into that blame game.
Gov. Linda Lingle has avoided second-guessing previous state decisions to give big public employee wage increases and tax cuts. In fact, she is acknowledging that she will be forced to give some pay raises this year and at least pay for increases in public worker health fund costs. At the same time, Lingle is holding on to a favored tax cut for Hawaii's poor.
The tough choices now presented by the Legislature run to the two extremes of either increased budget cuts or more and higher taxes. The third option is increased efficiency, and it will be up to Lingle to demonstrate that she can run the government with a more business- like attention to balancing revenues and expenses.
Today, however, there appears little indication that shouts of joy over a budget surplus will be heard anytime soon in Hawaii.
Richard Borreca writes on politics every Sunday in the Star-Bulletin.
He can be reached at 525-8630 or by e-mail at rborreca@starbulletin.com.
