Creativity is needed to avoid budget deficit

THE ISSUE Hawaii faces a deficit that might worsen because of the nation's economic crisis.

Gov. Linda Lingle reported a week ago that state government must be reduced to avoid a deficit of nearly $1 billion by fiscal 2011, in violation of the state Constitution. Even if wages of state employees are frozen, layoffs might be inevitable to achieve the spending reductions needed for the budget to be in the black.

While the nation faces an economic crisis regarded by some as the worst since the Great Depression, Hawaii faces a budget shortfall that might worsen as the national economy's waves hit the islands. Janice Okubo, a spokeswoman for the state Health Department, said state officials "are going to be trying to think creatively and see where we can move things around." State legislators must do the same when they convene in January.

A prime target, because it is the most expensive, is education, where a 20 percent budget reduction that might be needed would amount to nearly $70 million. Many of the programs the school board has been trying to save "will be on the chopping block," said Donna Ikeda, the board's chairwoman. "I'm bracing for the storm, or the hurricane, I should say."

Collections in the state's general fund have been in a decline since fiscal year 2005. State revenue grew by only 1.2 percent in fiscal 2008, far short of the 3.3 percent growth needed to fund the current budget.

Lingle ordered last week that vacant state positions not be filled and purchases of new equipment be discouraged, but that will not be enough. This is a time when the public employee unions must decide in ongoing contract talks whether to cooperate in saving jobs by agreeing to a wage freeze - or worse.