The party is over at the state Capitol.

Hawaii's customary vast spreads of food, office parties and live music on the Legislature's opening day are being called off for the first time, canceled by leaders who want to show that this year is all business.

The sober day at the Capitol tomorrow will set the tone for a legislative session that will be dominated by the poor economy and underfunded state budget, which is $1.2 billion short.

“;These are very trying times, and we need to get to work,”; said Senate Vice President Russell Kokubun (D, Hilo-Naalehu). “;The signal we want to send is that we have to do some heavy lifting, so let's get to it.”;

That likely means two things: more cuts and higher taxes.

Buried behind piles of pending bills, House Speaker Calvin Say pointed to a hand-drawn graph in his conference room showing how expenses have soared and revenues have plummeted.

“;I'm looking at the bigger picture. What is the greater good?”; asked Say (D, St. Louis Heights-Wilhelmina Rise). “;All the special interests will try to protect their turf, but does it help everyone? My answer is 'no.' Everybody gets hurt, no matter how you look at it.”;

ON THE AGENDA         Issues to be taken up by the Legislature include:         » Taking $100 million in hotel tax money from county governments to help balance the state budget. Counties might get the right to impose sales taxes in return.         » Setting minimum class time standards after Hawaii instituted the nation's shortest school year.         » Repealing tax exemptions.         » A tax increase from 5 cents to $1.05 per barrel of petroleum that would have increased the per-gallon price of gasoline by a few cents. The Senate did not attempt to override Lingle's veto of this tax last year because of protests from the airline industry.         Source: Associated Press

Higher taxes and fees would shrink the wallets of Hawaii residents already suffering because of the economic downturn. Hawaii's unemployment rate was at 7 percent in November, up from 4.9 percent in November 2008, according to the U.S. Bureau of Labor Statistics.

Hikes in the use tax on imported goods, franchise tax, insurance commission tax and general excise tax could be in play. They would come on top of the furloughs, targeted tax increases and spending cuts enacted last year.

In addition, lawmakers will consider ways to delay the burden of a pending $1,000-per-employee jump in annual unemployment taxes paid by businesses to keep unemployment payments flowing to laid-off workers.

Cuts will probably have to come from government employees after programs and services took big hits last year, Say said. Gov. Linda Lingle is proposing an elimination of state payments for public employee life insurance premiums and prescription drug reimbursements for spouses of retired state workers.

“;In government I don't think there's waste,”; said Senate President Colleen Hanabusa (D, Nanakuli-Makua) in a congressional debate last week. “;Seriously, I think Gov. Lingle has cut that budget as much as she can. ... We didn't have anything more to cut. We could start cutting departments, which is probably the next discussion we're going to have.”;

Small-government advocate Jamie Story, president of the Grassroot Institute of Hawaii, said there is plenty of room to trim waste. For example, she said, the state is spending $50,000 to shred Health Department documents and $32,000 for Christmas lights.

“;We would challenge lawmakers to cut those areas before they look at raising revenues,”; Story said.

Hawaii's most needy residents—the elderly, poor and disabled—are often finding themselves in desperate situations because of the economy, right when the government cannot afford to help them, said Alex Santiago, executive director of PHOCUSED, a consortium of nonprofits.

“;The needs have grown, and they're continuing to grow as you're cutting back,”; Santiago said.

Amid these budget problems, social issues—other than same-sex civil unions—might get little attention. Those ideas include assisted suicide, a ban on fireworks and gambling.

Civil unions are expected to be considered in the state Senate this week. If the bill passes, they face an uncertain fate before the House, where some representatives are resisting taking up the issue.