State’s budgets could drop 20%

Lingle asks departments to create funding plans to deal with an estimated $903 million shortfall

Hawaii departments - from education to health and public safety to agriculture - could lose up to 20 percent of their state operating funds under a plan to limit spending because of the slowing economy.

The state Budget and Finance Department, as part of a "contingency" plan, has asked state departments to submit ways of trimming 10 percent, 15 percent and 20 percent of their budgets for the 2009-11 biennium.

Gov. Linda Lingle's administration has predicted Hawaii could be $903 million in the red by fiscal year 2011 unless the state tightens its belt.

Officials from some state departments yesterday said they would have to review all programs and services and be creative as they compile separate budget proposals by an Oct. 10 deadline.

"It's going to be terribly painful and it won't be easy," said Board of Education Chairwoman Donna Ikeda, noting the Education Department faces almost $70 million in annual cuts.

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Faced with some $20 million in cuts, Hawaii public school leaders have struggled this year to trim or eliminate programs that would have the least impact on student achievement.

That task should get a lot harder next year, when the state could slash nearly $70 million from the Education Department - along with millions more from other agencies because of slow economic growth.

"A lot of the programs the (school) board is trying to save will be on the chopping block," Board of Education Chairwoman Donna Ikeda predicted yesterday. "I'm bracing for the storm, or the hurricane, I should say."

Hoping to avoid a nearly $1 billion budget deficit, the state has told departments to plan for a worst-case scenario in which their annual general fund budgets could drop by 20 percent beginning next fiscal year.

The state Budget and Finance Department has asked agencies to prepare three separate budget requests reflecting possible cuts of 10, 15 and 20 percent for the 2009-11 fiscal years.

Gov. Linda Lingle's administration has forecast Hawaii could be $903 million in the red by fiscal 2011 unless the state tightens its belt.

In a Sept. 11 memo to state departments, Budget Director Georgina Kawamura warned that "substantial adjustments must be made to total expenditures so that the state can live within its means."

The Lingle administration will analyze the various agency proposals and submit its executive budget request in December, spokesman Russell Pang said.

General fund tax collections in Hawaii have been on a steady decline since it grew 16 percent in fiscal year 2005. It dropped to 1.2 percent in fiscal 2008. As the state gets less cash - in large part because of a downturn in the islands' tourism and construction sectors - it needs to pare down spending, Kawamura noted in her memo.

"We are having everyone basically look with a critical eye on their programs," state Deputy Budget Director Robert Piper said yesterday. "This is an overall state effort for all of us to re-examine our spending."

Officials from a number of agencies said yesterday it's too early to tell how the proposed cuts would affect their services and whether they would be forced to lay off workers.

"Like other departments, we are diligently working on the request from Budget and Finance," said Public Safety spokeswoman Louise Kim McCoy, whose agency gets more than $220 million in state funds. "We are reviewing and researching our operations."

The state Department of Health has scheduled emergency meetings next week to discuss the more than $22 million it stands to lose under a 20 percent cut, said spokeswoman Janice Okubo. The Health Department is already trying to maximize use of federal reimbursements like Medicare to make up for any local funding loss.

"I think we are all kind of hard-pressed to find areas (to cut)," Okubo said. "We have asked all of our leadership to look really hard where we can reduce. Of course, we are going to be trying to think creatively and see where we can move things around."

DISMAL FUNDING SCENARIOS

Source: State Department of Budget and Finance