Lingle orders immediate cuts
A hiring freeze and travel limits are among plans with a projected $1 billion budget deficit
STORY SUMMARY »
Gov. Linda Lingle has issued emergency orders for the state to start cutting spending in light of a looming deficit that could approach $1 billion. But legislators say the state will have to lay off workers to balance the budget.
Current projections point to a state budget deficit of more than $900 million by June 2010.
In a recently issued state memo, Lingle said "immediate action must be taken to control and reduce government expenditures."
State Budget Director Georgina Kawamura was blunt in her own memo, telling departments that "total resources will be insufficient to meet the level of expenditures."
Because the state is forbidden by the Hawaii Constitution from running a deficit, the budget will have to be cut, Kawamura said.
To do that, she told directors, "programs with lower priority should be identified for possible reduction or elimination."
Rep. Marcus Oshiro, House Finance Committee chairman, said the budget predictions are so dire, program cuts and layoffs are likely.
FULL STORY »
The state is facing nearly a $1 billion deficit by July 2010 if the budget is not cut, according to new projections from state officials.
SHIFT TO RED
According to the state Budget Department, the state budget is going from a $493.4 million surplus to a $903 million deficit in five years if nothing is done. Here are the fiscal year numbers:
» 2007: $493.4 million ending balance
» 2008: $331.2 million ending balance
» 2009: $162.3 million ending deficit
» 2010: $584.5 million ending deficit
» 2011: $903 million ending deficit
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Georgina Kawamura, state budget director, held a series of closed-door meetings with House and Senate leaders last week to update them on the new projections.
Speaker of the House Calvin Say described the budget briefing as "dismal."
State Rep. Marcus Oshiro, House Finance Committee chairman, said the growing deficit could result in state workers being laid off.
Kawamura declined to comment on the discussions yesterday, but her department has made public two memos that show the Lingle administration is getting ready to dramatically redraw the budget.
In an executive memo sent by Gov. Linda Lingle on Aug. 26, the administration noted that the state Council on Revenues has cut the rate of growth repeatedly over the past year.
"Given the magnitude of this level of revenue reduction, immediate action must be taken to control and reduce government expenditures, starting with (fiscal year 2009)," Lingle wrote.
She said "no new programs should be contemplated because they are not sustainable in the future."
She added, "Purchases of new equipment, software, comput- ers and vehicles are strongly discouraged. Travel is limited to essential purposes where teleconferences are not practical."
Kawamura sent a memo to state departments telling them that the state's total resources "will be insufficient to meet the level of expenditures authorized" in the state budget prepared by the Legislature in 2008 and 2009.
"The general fund gap is projected to be over $900 million," Kawamura wrote. "Under these extraordinary financial circumstances, immediate and substantial actions are needed to balance the general fund."
Lingle also announced that except for emergencies or court-mandated decrees, hiring to fill vacancies is frozen.
Besides the hiring freeze, Lingle said all state contracts of more than $10,000 would have to be approved by her office, and all out-of-state travel would also need her approval.
Kawamura ordered all department directors to look at the budget increases that have occurred since 2004, saying that "programs with lower priority should be identified for possible reduction or elimination."
Even with Lingle's plans to curb spending, Oshiro said, the state is still in the red.
"There are going to have to be cuts. There are no ifs, ands or buts about it," Oshiro said.
"There might be some reduction in work force," he added.
"When I say reduction in force, I mean warm bodies. To address this kind of a shortfall, it will be very difficult to not cut programs and for it to have an impact on the work force."
Linda Smith, Lingle's senior policy adviser, said the changes in the revenue projections have resulted in an estimated loss of $2.8 billion in expected revenue.
"We know we are going to ask the departments to look carefully at every expenditure," Smith said, adding that she was not present during Kawamura's briefing.
"In terms of reductions in programs, I think we realize there will have to be some serious review," Smith said, adding that it was too early to say whether state programs would have to be cut.
Oshiro said he had been worried about the state's fiscal condition for the past two years and had asked for alternative spending plans from the state.
"The administration did not cooperate, basically putting a gag order on the directors," Oshiro said. "I have been criticized by the administration for not spending. We saw this coming, and we tried to rein in the administration."
