Gov. Linda Lingle wants both cooperation and compromise from the state Legislature and the state unions.

In a sober assessment of the state's finances, Lingle's annual State of the State speech yesterday was marked by the budget deficit, which she called “;the severest economic crisis we have ever faced.”;

“;We cannot afford to merely hunker down and muddle through the next year or two,”; Lingle said during her 42-minute address.

 

Governor's Address Calls For Sacrifices

 

 

Governor Lindal Lingle tried to sound optimistic, despite the dark cloud hanging over the state in the form of a 1 point 8 billion dollar tax shortfall, declinging tourism numbers and rising unemployment.

[ Watch ]

 

  “;Today's struggling economy has created a deep hole in our budget that we need to dig out of this session,”; she said.

During the speech and in a news conference afterward in her executive office, Lingle said that the state has three ways to attack the deficit: cut employee costs, cut programs and get more money from taxes and fees.

According to increasingly pessimistic projections from the Council on Revenues, the state will lose $75.6 million during this fiscal year and a whopping $865.2 million over the next two fiscal years.

To make that up, Lingle said she is looking at across-the-board reductions to state employees' salary and benefits. Others costs include the state employee medical plan and retirement benefits.

Lingle said she wants to discuss unspecified ways to trim the entire wage and benefit package with the four county mayors.

Then, Lingle plans to meet with the public employee labor leaders to reach some form of consensus.

“;We need to discuss all the benefits and wage issues together. That is why there won't be any early decisions on this,”; Lingle said. “;The way I see the decision going, legislators and myself will have to decide which of these three components, budget, tax and labor—how much of the gap is going to be closed from each of these three.”;

Lingle said she wanted to price out how much could be saved by labor reductions and then present that to public-employee labor leaders for their thoughts on how specifically to make the cuts.

State budget officials estimate the state would save $25 million for every 1 percent cut in salary, Medicare and retirement benefits for all state workers, including the Judiciary.

Labor leaders did not give any indication of compromise yesterday.

Randy Perreira, executive director of the Hawaii Government Employees Association, said Lingle's address and proposals from legislators appear aimed disproportionately at state workers.

“;She was a little short on substance with respect to how she would propose that we try to find our way out of this economic mess,”; he said. “;The only thing she seemed to focus on was to use this as an opportunity to suggest either wage and/or benefit cuts for public employees.”;

Lingle was firm in her insistence that the state budget will have to be smaller than the one the state now uses, saying the budget crisis is forcing “;everyone to come to grips with reality and find ways to be more effective.”;

For instance, Lingle said she is sending down legislation to stop the planned pay raises for both state executives and state judges. Legislators, Lingle said, will have to make their own decisions on their future pay increases.

Also, Lingle said she was recommending that dental services for adults on Medicare be halted.

Cuts to Hawaii's social services also have to happen, Lingle said.

“;Whether it is social services or education, the bottom line is we cannot spend at the level we have been,”; Lingle said. “;The reality is there is going to be some reduction in services over the short term.”;

That prediction concerns social service advocates such as Barbara Kim Stanton, executive director of the local chapter of AARP.

She called Lingle's speech “;disappointing”; because the governor did not spell out what agencies would take the budget cuts.

“;Preserving the safety net is our concern,”; Stanton said. “;What will happen to the people who are falling through the cracks?”;