Economic downfall needs state leaders’ cooperation

THE ISSUE Gov. Linda Lingle plans to reduce the size of state government to avoid huge deficits.

Amid gloomy predictions about Hawaii's tourism industry, Gov. Linda Lingle has announced plans to reduce the size of state government to avoid huge budget deficits. Legislative leaders agree that hard times are ahead, and should cooperate with the governor accordingly.

The state's budget had a surplus of nearly $500 million at the end of fiscal year 2007 but faces a shortfall of $162.3 million by the end of the 2009 fiscal year that could grow to a deficit of more than $900 million by the end of 2011, according to the state Budget Department. In an executive memo, Lingle said "immediate action must be taken to control and reduce government expenditures," starting with the 2009 fiscal year.

House Speaker Calvin Say agreed that the projected budget figures are "dismal." Senate President Colleen Hanabusa calls them "a crisis" and raised doubts about whether Lingle will be able to cut enough to forestall a deficit, leaving the unpleasant task to legislators.

Like most states, Hawaii is bound by a constitutional requirement of a balanced budget. When faced with a deficit projection four years ago, Lingle ordered adjustable state spending to be reduced by 1 percent across the board. The economy perked up and the order was rescinded.

That is not likely to recur. Hawaii hotels were hit in July with a double-digit decline in visitor arrivals from the same month last year, and the state's economic engine faces continued trouble at least into next year.

Lingle is telling state departments they shouldn't contemplate any new program, should discourage purchases of new equipment and should freeze new hires, even for filling vacancies. All state contracts exceeding $10,000 will require her approval.

Oshiro said that won't be enough, and he talks of laying off "warm bodies." State employees with little seniority should prepare for the worst.