Democrats cut Lingle’s budget proposal

Legislature's budget is less than the one requested by governor

In the face of what they say is a slowing economy, Democratic lawmakers cut Republican Gov. Linda Lingle's proposals for tax credits and for new prison construction in a $10.7 billion budget that is more than $40 million less than what Lingle proposed.

Legislative leaders criticized Lingle yesterday for not doing more to stimulate the economy and said their budget replaces tax credits with construction spending on public schools and universities to stimulate the economy.

However, Lingle, in a speech on Friday, said the economy is not in as bad a shape as Democrats believe.

Senate Republican leader Fred Hemmings said he likes less spending, but still plans to vote against the state budget.

"I don't think the majority Democrats have become fiscal conservatives," he said.

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Democrats in the Legislature and the administration of Republican Gov. Linda Lingle are sparring over what's needed to help Hawaii's economy.

In crafting a nearly $11 billion supplemental budget, the Legislature's Democratic leaders adopted a lower rate of growth for the state's economy, dropping it from 3.9 percent to 3.5 percent.

The Legislature's budget is less than the one requested by Lingle.

The lowered revenue forecast forced the Legislature to drop proposals for tax credits and new prison construction because of the costs.

Yesterday, House Speaker Calvin Say and Senate President Colleen Hanabusa criticized Lingle for not doing more to help the economy.

Their criticism comes after Lingle gave a major speech Friday arguing that the state's economy may have taken some blows with the shutdown of two airlines and the major business on the island of Molokai, but the general economy is strong and growing.

"I would disagree with her forecast," says Say (D, (St. Louis Heights-Palolo-Wilhelmina Rise).

Say, who is a private businessman with an import-export business, reports that rising fuel surcharges and the dropping number of visitors are hurting him.

"I judge the tourist industry by the number of chopsticks I sell and now it is only two cases a week for all the hotels in Waikiki," Say said.

Hanabusa was also critical of Lingle's economic projections.

"Where is she getting her information, we are the ones who have been saying the economy is on a downturn," Hanabusa (D, Nanakuli-Makua) said.

"We have tried to be proactive with the kind of issues that her administration should have been submitting. She has been awfully quiet in terms of trying to balance her budget," Say said.

Say noted that the past two governors, John Waihee and Ben Cayetano, had to deal with economic downturns and convened "economic recovery task forces" but so far Lingle has not done so.

"So far, for the last two years we took the initiatives that the governor did not implement," Say said.

In response, Linda Smith, Lingle's senior policy advisor said yesterday that the Legislature, which is set to end Thursday, should be proposing solutions.

"If the Legislature genuinely believes we are facing a serious economic downturn, we would have hoped they would have come up with some specific stimulus proposals as part of their legislative initiative," Smith said.

Senate Republican leader, Fred Hemmings said he liked the idea of lowering revenue projections, but still plans to vote against the state budget.

"I don't think the majority Democrats have become fiscal conservatives. I surmise they are running the treasury to have a fat general fund for the public unions when they bargain next year," Hemmings (R, Lanikai-Waimanalo) said.

Hanabusa said that the biggest help to the economy that the Legislature can give is to encourage construction. She said the state budget should have increased spending on public school and university buildings and the money should be spent immediately.

She rejected the Lingle administration's repeated calls for tax reform, saying legislators chose to devote state spending on more viable projects instead of small tax cuts.

"A tax cut is a loss of revenue, we thought the money would be better appropriated for things that have more impact and no loss of revenue," Hanabusa said.