State delays $43M due to nonprofits

State fiscal concerns to delay $43M for subsidies and grants

STORY SUMMARY »

More than $43 million in grants and subsidies awarded by the Legislature to various nonprofit groups will not be released until at least January, and even then will be subject to greater scrutiny under spending guidelines adopted by Gov. Linda Lingle.

The "Budget Execution Policies and Instructions" for the 2008 fiscal year were issued just ahead of the Tax Department's report that state revenues for last fiscal year were about $115 million less than forecast.

Nonprofit groups say they will be able to cope, but it will require some juggling of their budgets for the first six months of the fiscal year.

---

FULL STORY »

Most nonprofit groups that were awarded grants and subsidies from the state Legislature are unlikely to receive any of that money until at least January, under spending policies adopted by the Lingle administration for the current fiscal year.

The Legislature approved 148 grants-in-aid totaling $43.1 million for operations and capital improvement projects for various nonprofit groups in the fiscal year that began July 1.

MONEY ON HOLD A look at some of the grants-in-aid approved by the Legislature for the 2008 fiscal year for operations of nonprofit groups. » Hawaii County Economic Opportunity Council, $552,227 » Kauai Economic Opportunity Inc., $540,000 » Hawaii Farm Bureau Federation, $500,000 » Hawaii Home Ownership Center, $500,000 » Bishop Museum, $450,000 » Friends of Iolani Palace, $400,000 » Parents and Children Together, Weed & Seed, $400,000 » Moanalua Gardens Foundation, $300,000 » Maui Community Arts & Cultural Center, $250,000 » Enterprise Honolulu, $250,000 Source: Hawaii Legislature

But that was before last week, when tax collections for the year came in at about $115 million less than projected.

Economists had warned of a drop in the revenue forecast prior to the final tax collection figures that were reported Friday.

Gov. Linda Lingle preceded the tax collection announcement with a June 27-dated memorandum to all department heads titled "FY 08 Budget Execution Policies and Instructions."

In it, Lingle states all grants will be made on a case-by-case basis, subject to her approval.

"Due to revenue and fiscal concerns, allotments for operating grants and subsidies will not be made in the first two quarters of FY08," she added. "Exceptions may be considered for public health and safety reasons or other critical needs."

Budget Director Georgina Kawamura said the six-month restriction is a "little different" from past practices but that it is in line with the administration's overall call for fiscal responsibility and justifying all expenditures.

She added that department heads would work with nonprofit groups to inform them of the policy.

Lingle's memo also declares that state agencies would only be receiving their budget allotments for the first quarter of the fiscal year. The remaining amounts are to be determined later, after the state Council on Revenues updates its forecast for the state's tax collections.

House Finance Chairman Marcus Oshiro (D, Wahiawa-Poamoho) said the recent budget memo was indicative of "how serious the reduction in the revenue forecast is being taken by the administration."

He noted that by law the governor must inform all grant recipients of the possibility that they might not receive the funds awarded by the Legislature.

"Some of them might be relying upon their first-quarter allotment," he said.

Grant amounts range from $20,000 for operations of the Paniolo Preservation Society to $2.2 million for construction projects of Kokua Kalihi Valley on Oahu.

Catholic Charities of the Diocese of Honolulu was awarded $134,000 for operations at its Lanakila Multi-Purpose Senior Center. Officials say the restrictions will lead to tighter budget management.

"It just means we have to use up whatever funds we have available in these early months," said Diane Terada, division administrator for Catholic Charities. "Hopefully, when the funds are released, the funds will be contracted quickly so we can maintain operations."

The Hawaii Primary Care Association, which was awarded $50,000 for a program that helps provide prescription drugs to poor people, said the program could be at risk if the funds ultimately do not come through.

"What we're going to do is try to juggle our budget and hope that the funding comes through," said Beth Giesting, chief executive officer of the Care Association.

She added that such budget restrictions have not been unusual.

"This is not unique to this administration," she said. "There have certainly been times in the past, when the budget wasn't looking too good, that the governor didn't release funding."