Personnel raises will
bust budget, says LingleThe governor predicts a $103 million
deficit by fiscal year 2006
The Lingle administration is studying a new series of budget cuts because of the pending public worker salary increases that could cause a deficit of $103 million by fiscal year 2006.
On Tuesday the administration briefed Republicans in the Legislature, telling them that settlements with the University of Hawaii Professional Assembly and the arbitrated award to the Hawaii Government Employees Association will cost an extra $66.3 million in fiscal 2006.
The state's fiscal year runs from July 1 until June 30 of the next year.
Georgina Kawamura, state budget director, said Gov. Linda Lingle had already asked the state departments to prepare budgets with cuts of 1, 3 or 5 percent in anticipation of the extra wage costs.
But Kawamura said yesterday that only $35 million in savings resulted from a 5 percent cut in the portions of the budget that could be reduced.
"We will have to reduce expenditures. ... We are going to have to just cut expenditures," she said.
House Speaker Calvin Say, however, dismissed the Republican governor's position, saying new legislative budget plans will take care of the salary increases.
"I am surprised they don't have anything in the budget for teachers or blue-collar workers," Say said. "We are working on a balanced financial plan."
Democrat Say said the Legislature's version of the budget will not be based on a tax increase, although he expects some cutbacks in programs and vacant state jobs. The Senate's $3.6 billion supplemental budget, released yesterday, also calls for taking $55 million from special funds and $9 million from the rainy-day fund to make it balance.
But Republican Sen. Sam Slom complained that the state is being driven by a need to pay for public worker contracts.
"All we are doing down here is funding union demands for more salary and benefits.
"With all the talk about concern for new education programs, we are not concentrating on that," said Slom (R, Diamond Head-Hawaii Kai).
The state budget's six-year plan calls for an ending balance that goes from $117.2 million at the end of fiscal 2003 to $461.1 million by fiscal 2009. But before Hawaii gets that big surplus, it will see the surplus drop to just $6.1 million in fiscal year 2006, based on current tax collection predictions.
According to the state projections, if the salary increases are added into the plan, the state will have a deficit of $192.6 million in fiscal 2006 and then $312.5 million in fiscal 2007.
Because the Constitution does not allow the state to operate at a deficit, either the state budget has to be cut or revenue projections have to increase to compensate for the wage increases.