Lingle's cuts kept in budget


POSTED: Tuesday, May 04, 2010

The new version of the state budget, passed last week by the state Legislature, keeps almost all the budget cuts recommended by Gov. Linda Lingle.

While Democrats contend they were able to amend the budget to save key state jobs and programs, the budget shows that $1.1 billion of the money needed to address the $1.2 billion shortfall comes from Lingle's cuts.

The biggest cut or savings comes from Lingle's insistence on furloughing state workers. That change in working conditions lessened the shortfall by $366.7 million.

The next-biggest change in the budget was adjusting state income tax refunds so that the state paid $275 million in refunds in the new fiscal year, starting in July.

But that change means that next year the state will either have to make up that $275 million or continue to delay tax refunds until July.

“;Without additional revenue, the $275 million has to be added to the shortfall,”; said Rep. Marcus Oshiro, House Finance Committee chairman.

The Legislature put back some of the heavily publicized Lingle budget cuts such as reductions in the number of state agriculture inspectors and the eligibility case workers with the Human Services Department, but the Legislature also added another $93 million in additional cuts to Lingle's budget.

The Legislature also increased taxes by $58.5 million. The biggest tax increase was $26.3 million to be collected by halting itemized deductions for high-income taxpayers. The $1-a-barrel increase for imported oil is expected to bring in another $13.2 million.

The Legislature also saved $93.3 million by deferring tax credits for high-tech investments.

Oshiro (D, Wahiawa-Poamoho) said the Legislature's Democratic leadership is watching Lingle's vetoes, because the rejection of a major tax increase will unbalance the budget.

“;They are very crucial,”; Oshiro said. “;Without these additional revenues, there will have to be additional cuts. It will be a dollar-for-dollar basis. So if the governor wants to veto any of them, the budget has to be cut by the same amount.”;

It was still undecided, Oshiro said, whether the Democrats in the Legislature will decide to return for a veto override session in July if Lingle vetoes any tax bills.

Oshiro warned, however, that the income tax refund delay will become a yearly event if the state does not see a sharp increase in tax collections.

“;It is a huge part of balancing the budget,”; Oshiro said.

Next year, lawmakers are likely to again face the question of whether to raise the general excise tax. During debate last week on the Senate floor, Sen. Donna Mercado Kim, Ways and Means Committee chairwoman, warned that without an improvement to the state's economy, a GET increase might be likely.

Oshiro said yesterday he would again push for cutting tax exemptions.

“;But it all depends on what we see. If travel by visitors goes up, construction goes up. If we truly see a recovery, it would be good,”; Oshiro said.