Tax report erases
state deficit

An extra $140 million in
revenues is forecast but Lingle
is hesitant to release funds

The state will have an additional $140 million to spend in the current fiscal year, but Gov. Linda Lingle is not ready to release money for social service agencies that say they need state funding.

According to the Council on Revenues, the state will receive about $63 million from higher tax collections, get a one-time boost of about $40 million because of a new law requiring businesses to submit their employee payroll taxes earlier, and pay about $40 million less in tax credits to businesses.

Despite the news, Lingle said she will not release money for programs state lawmakers funded until her administration determines whether those programs will deliver on services.

"Clearly, this puts us in a good position for programs that are achieving results, and for new programs we will have the money," Lingle said.

Lingle ordered cuts to all of her departments and restricted other money earlier this year pending yesterday's report from the Council on Revenues. Based on the council's report in May, she projected the state would have a $150 million-$160 million budget deficit at the end of the next fiscal year.

The council's projections erase that deficit, said state Budget Director Georgina Kawamura. In August the state collected $358 million in revenue, about 38 percent higher than in August 2003.

But tax officials said the large increase was due mostly to a so-called double weekend effect. This year, because July ended on a Saturday, some of the July revenue came in August. Last year, August collections were lower than normal due to the month ending on a weekend.

The economists whose revenue projections lawmakers use to plan the state budget said general fund revenues will increase 8.8 percent this year compared with last year. They had earlier projected a 7.9 percent growth.

"All things are pointing in the right direction to a stronger economy," said Michael Sklarz, council chairman.

Awaiting release is some $22 million in grants in aid to social service agencies.

"The governor should just say whether or not she supports these programs," said Rep. Scott Saiki (D, Moiliili-Kaimuki), House majority leader. "If she's not going to release the funds, she should tell them so they can make other arrangements."

Legislators have been critical of Lingle for failing to release $14 million they approved to combat the state's "ice" epidemic and grants for social service providers.

Kawamura said her department is reviewing all programs expecting state funding. She said Lingle has released funds for all programs that passed her review.

"The governor definitely does not have anything sitting on her desk," Kawamura said.

On Tuesday the governor released $219,000 for the Big Island Substance Abuse Center, which operates a residential adult treatment facility in North Kohala and provides substance abuse counselors for students at some Big Island high schools.