StarBulletin.com

Time has come to tap Hawaii's rainy day funds


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POSTED: Saturday, March 13, 2010

When Hawaii began experiencing budget shortfalls caused by the recession, Gov. Linda Lingle decided that state spending cuts should be shared equally by various agencies. It soon became clear that the school system could not withstand the shortfall, and the same problem now is playing havoc with social services that serve as a safety net in times of hardship.

It should be painfully clear now that some state functions are more important than others in coping with the ongoing crisis. The state's rainy day fund must be tapped to help maintain essential services for those on the brink of destitution, at risk for harm, or worse.

Social service providers in Hawaii packed the state Capitol auditorium on Wednesday to explain their plight. A child welfare services specialist said her office has been crippled by the shrinkage of office help while the need for assistance has grown, creating harm for children and others in need.

Lingle has said that increasing taxes to pay for state services would damage businesses that are trying to make their way through the recession. Sen. Gary Hooser, one of the few legislators who attended the Capitol briefing, said the answer is to use the special funds, to “;invest the money we do have and stop cutting these important social services.”;

As dire as it is here, the situation is worse in some states. While Hawaii's unemployment rate inched up to 6.9 percent in January — February's rate has yet to be figured — the jobless rate was 9.7 percent nationally and double-digit in five states, topped by Michigan's 14.3 percent.

Lingle has called for “;immediate and meaningful legislation”; to provide tax credits to businesses so they will hire new employees. That includes a reduction of unemployment taxes paid by employers that still will be seven times what they have been paying on average into the unemployment insurance fund.

Time will tell how well and how quickly such measures will help businesses rebound. Meanwhile, the increased need for social safety nets is evident. The U.S. Labor Department reports that 6.3 million Americans have been unemployed for six months or longer, the most since the government began keeping track in 1948 and more than double the next-worst period, in the early 1980s.

More than 15 million people are officially jobless nationally. In Hawaii, the unemployed rose by nearly 5,000 in January alone to reach 43,450.

Darwin Ching, director of the state Labor Department, says past experience indicates that unemployment will rise in Hawaii for about 10 to 18 months after the economy has bottomed out. However, after the national recessions in 1990 and 2001, it took 31 and 46 months before employment rose to its previous national peaks.

While Hawaii continues to cope with the economic abyss, legislators must see clear to prioritize and bolster state agencies assigned with rising caseloads to help individuals and families on unemployment benefits, food stamps, Medicaid and other survival services.