Hawaii’s 25th state Legislature opened this morning in the face of historic budget deficits.

House Speaker Calvin Say, a financial conservative who has previously opposed cutting state taxes, proposed lowering the state’s 4 percent excise tax. He said the shortfall that move would create could be offset by eliminating current exemptions to the tax enjoyed by certain businesses.

“We are facing a budget crisis unmatched in my 32 years in the House,” Say told the assembled  51-members in his opening day speech.

To deal with the crisis, Say urged lawmakers  “not to be afraid of considering structural reform in our health system, tax system, land use and permitting system and even land tenure system.”

Say also said that public workers may have to take cuts to their benefits package “in order to maintain basic services, avoid layoffs and balance the budget.”

“The pain should be broadly shared by all rather than concentrated on only an unfortunate few,” Say said.

In the Senate, Senate President Colleen Hanabusa reacted to the same bleak financial news by saying that the Legislature should become more involved in running state government.

She proposed a special legislative oversight committee be formed to meet weekly and go over how Gov. Linda Lingle releases state money for capital improvement projects.

“I am confident that the governor will welcome the participation of the Legislature to ensure public confidence that we are all doing all we can to keep our construction industry on the job,” Hanabusa said.

She said all plans to find more state money are on the table, including “executive, judicial and legislative pay and legalized gaming.”

Hanabusa said it also may be time  to take back the transit tax money given to Honolulu to fund rapid transit.

Hanabusa said she would look at “deferring the transit tax for a year or more to provide relief to Hawaii tax payers.”

The bad economic news, Hanabusa said, just shows how Hawaii’s people are suffering in the economic downturn.

“Unemployment is up two points since a year ago, when our rate was the lowest in the nation. Homelessness is growing, and the safety net which people rely upon the government to provide is full of pukas,” Hanabusa said.

Speaking for the Republican minority in the Senate, Sen. Sam Slom noted that this is Hawaii’s 50th anniversary of statehood and there should be more emphasis on the positive.

“We need to get to work, stop whining, not look for a government handout and be more productive and creative,” Slom said.

The state budget problems are caused by a dramatic slowing in the local, national and international economies, according to state leaders.

Say estimated that the state is facing a $1.8 billion loss over three years if nothing is done to curtail state spending.

“We must make up this shortfall,” Say said in his speech this morning.