Budget proposal cuts $400 million


POSTED: Tuesday, December 23, 2008

Public workers would not suffer any layoffs, but they also would not receive any pay raises under Gov. Linda Lingle's proposed state budget.






        Gov. Linda Lingle's proposed budget includes:


» A 14 percent reduction in nonessential spending for state agencies.


» No pay raises for public employee unions.


» Refinancing of debt.


» Tightening of certain tax laws and stricter enforcement of tax collections.


  Two programs to be cut:


» Healthy Start at the Health Department


» Adult dental service in the Medicaid program at the Department of Human Services


Lingle unveiled her proposal yesterday to cut $395 million in government spending for the next two fiscal years.

Although contracts with the state's public employee unions are up for renegotiation, the freeze on wages is necessary to avoid any job cuts, Lingle said at a news conference announcing her $22.4 billion budget for the fiscal biennium that begins July 1.

“;If there are any kind of raises of any size, because of the large number of government employees, it almost by definition means that you're going to have some extremely deep cuts to pay for it,”; Lingle said. “;That's likely to result in people being laid off from their jobs, so there is some kind of a trade-off.”;

Lingle first mentioned the wage freeze this summer, as the global economy worsened and the state's revenue picture became bleaker than originally predicted.

Randy Perreira, executive director of the Hawaii Government Employees Association, the state's largest public worker union, said Lingle's budget came as no surprise.

“;She's just following through with what she has suggested for the last couple of months. Given the economic picture as her administration sees it, they weren't in a position to budget for wage increases,”; Perreira said. “;From our perspective, there is a process by which we continue and conclude negotiations, and we're not going to get involved in any kind of public conversation about the negotiation process.”;


;[Preview] Lingle Asks State Leaders To Reject Raises

Governor Lingle says she is doing her best not to lay off any state workers during a billion dollar budget crisis.


Watch ]





  The $395 million in cuts represents a 14 percent reduction in the nonessential spending budgets for all state departments.

In addition to freezing public employee wages, Lingle's budget also envisions cuts of some state programs, refinancing of debt, tightening of certain tax laws and stricter enforcement of tax collections.

Lingle said her administration's three main goals in crafting the budget were to maintain essential services, avoid public-worker layoffs and provide funds for priorities such as the state's renewable-energy goals and investment in the technology sector.

The governor met yesterday with majority Democrats in the Legislature to discuss her budget proposal.

Democrats and Republicans have vowed to work cooperatively in the coming legislative session to help save an economy that has crashed along with those of mainland states because of global financial crises.

“;I really appreciate her coming forth,”; House Finance Chairman Marcus Oshiro (D, Wahiawa-Poamoho) said of the Democrats' meeting with the Republican governor. “;It gave me the impression that she does realize the seriousness of where we are today and the need to set aside politics and really work together.”;

Lingle's budget also assumed no further decline in state revenues.

In October the state Council on Revenues, which forecasts how much money will be available in the fiscal year, projected a decline of 0.5 percent in state funds for the current fiscal year, which means the state is expected to end the 2009 fiscal year on June 30 with about $50 million less in the general fund than when it started.

The latest figures from the state Tax Department indicate that through the first five months of the current fiscal year, tax collections are down 2.6 percent.

Lingle said her administration would be prepared if the council lowers its economic forecast for the 2010 fiscal year when it meets again Jan. 9, but she declined to provide specifics of any contingency plan.

To help deal with the current shortfall, Lingle plans to seek a transfer of $40 million from the Emergency Budget and Reserve Fund, also known as the “;rainy day fund,”; to help the state end the fiscal year with a positive general fund balance.

In the past, Lingle has rejected calls to raid special funds to balance the budget.

She has consistently refused to tap into the Hawaii Hurricane Relief Fund for that purpose. The fund has a balance of about $180 million.

Lingle repeatedly refused yesterday to say whether she would consider using the hurricane fund.

“;We don't know if this will be an issue or not be an issue,”; she said. “;I'm not going to speculate at this time. We've been reviewing a lot of contingencies. We have a commitment to work collaboratively with the Legislature, and I'm going to be talking to them before I talk to you about it.”;