Lingle’s budget plan boosts construction

The governor bases her spending proposal on modest growth in the state's economy

Gov. Linda Lingle has included $20 million for a new homeless shelter in Honolulu and $26 million for renovations to Aloha Stadium on her list of spending proposals for the next fiscal year.

Lingle unveiled her supplemental budget request yesterday.

Overall, the plan calls for a $100 million increase in general fund spending and a $1.1 billion increase in spending on construction projects.

The increase in spending comes at a time of moderate economic growth.

Through the first five months of the current fiscal year, the general fund has grown by 3.4 percent, the Tax Department reported last week.

The state Council on Revenues, which makes the quarterly forecast upon which the state's budget is based, predicted in August growth of 5.7 percent. The council is scheduled to meet again next month to determine whether to revise the forecast.

Lingle said she also has left room for some "very targeted tax relief" but did not elaborate yesterday, saying she would provide more details next month in her State of the State address.

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Expecting moderate economic growth in the coming years, Gov. Linda Lingle has proposed a 1.9 percent increase in general fund spending in the next fiscal year along with a tripling of funds for construction projects.

General fund spending in fiscal year 2009, which begins July 1, would increase by $100.2 million, to $5.4 billion. The capital improvement project budget would increase by $1.1 billion, to $1.6 billion.

Lingle unveiled her supplemental budget proposal yesterday, saying she also plans to introduce three proposals for "very targeted tax relief." She declined to give specifics yesterday, saying she wanted to save the details for her annual State of the State speech next month.

"I can tell you it's not in the range that I've been able to propose in previous years, and that's why the very focused targeting of it was so important," she said.

Lingle acknowledged that her budget is based on a "gut feeling" that economic growth is likely to be modest compared with recent years.

The state Tax Department reported last week that general fund revenues have increased by 3.4 percent through the first five months of the fiscal year.

The state Council on Revenues' most recent economic forecast predicted general fund growth of about 5.7 percent for the current fiscal year, followed by 3.8 percent growth in fiscal year 2009.

"I hope they're right," Lingle said, "but I'm operating that my more moderate projection is going to be correct.

"I would expect if we get through this fiscal year '08 at around 4 percent (growth), that would be a good, healthy, steady, moderate rate of growth."

The Council of Revenues is scheduled to meet next month to review its forecast and determine whether any revision is needed.

House Finance Chairman Marcus Oshiro said Lingle's budget proposals would get a thorough public hearing, noting that some of the priorities she outlined -- affordable housing, education, public infrastructure and historic and cultural preservation -- are similar to those of the Legislature.

"I think there's a lot of agreement and consensus on priorities like education, housing, basic essential government services," said Oshiro (D, Wahiawa-Poamoho). "The question is in the quantity of funding for the services."

Oshiro said he also expected a slowing of economic growth.

Lingle and Oshiro also acknowledged that by law, some form of tax refund is required because of general fund growth over the past two fiscal years, but both said it was too early to predict what form that might take or who would benefit.

Lingle said that of the $100.2 million in general funds she is requesting, two-thirds is for fringe benefit increases for government employees, including $57.7 million in contributions to the state Employee Retirement System and an $8.4 million increase in Social Security and Medicare payments.

On capital improvement projects, Lingle said close to half of the additional $1.1 billion is from revenue bonds to finance upgrades to the state's airports and harbors.

Other projects included in the proposal are $20 million for a new permanent homeless shelter in urban Honolulu to replace the Next Step shelter in Kakaako, which opened in May 2006 as a temporary emergency shelter.

Lingle also set aside $26.4 million for repairs and renovations at public-housing projects statewide, $26 million to complete the purchase of Kukui Gardens and ensure it remains as affordable housing, $25.9 million for renovations to Aloha Stadium and $40 million to renovate facilities at the University of Hawaii.

"These are important projects," Lingle said. "Public housing has to be done; we can't let it continue to deteriorate. These are projects that I feel comfortable, at this time, spending money on."