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The Honolulu Advertiser
Posted on: Wednesday, January 6, 2010

Across-the-board cuts in Hawaii budget criticized at hearing

By Derrick DePledge
Advertiser Government Writer

Hawaii news photo - The Honolulu Advertiser
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Several state lawmakers and a leading economist yesterday questioned why the Lingle administration mostly used across-the-board spending cuts to contain the state's budget deficit, arguing that it led to misguided decisions such as furloughs for public school teachers on classroom days.

The Lingle administration imposed nearly 14 percent budget restrictions on many state departments this fiscal year, giving each department a target and generally allowing department directors to choose how to make the cuts.

At an informational briefing on the state budget before the state Senate Ways and Means Committee and the state House Finance Committee, state Rep. Marcus Oshiro, D-39th (Wahiawä), the chairman of the House Finance Committee, said the lack of priorities was disappointing.

Carl Bonham, a University of Hawai'i-Mänoa economist who serves on the state Council on Revenues, called it disturbing and said public education should have been a priority .

"It's a Band-Aid," Bonham said. "The question is where should we be doing the cutting?"

Georgina Kawamura, the state's budget director, invited critics to come up with their own suggestions on where to cut.

"With due respect to Carl Bonham, I wish he would have told us what targeted programs to eliminate," she said.

Kawamura said each state department and program has a constituency. "No matter what you touch, someone will be here saying that we shouldn't cut that," she said. "It's not an easy decision to make."

The state Department of Education chose teacher furloughs on classroom days to help meet the budget restriction, an alternative to layoffs or deeper school program cuts. Teacher furloughs are included in a new two-year contract with the Hawaii State Teachers Association, but the governor, educators and the teachers union are in negotiations to reduce the number of furlough days after public backlash.


Yesterday's briefing was the first of several in advance of this year's session of the state Legislature that opens later this month. Gov. Linda Lingle has proposed closing the state's $1.2 billion budget deficit through June 2011 with a combination of spending cuts and tax measures, including delaying state tax refunds from April to July and scooping up hotel-room tax revenues that now go to the counties.

Kawamura said closing the gap and achieving a balanced budget is the administration's priority.

"This is our paramount responsibility and overriding concern in the current fiscal biennium," she said.

The state is approaching the second year of a two-year budget cycle. Lingle is taking executive action, such as delaying the tax refunds, to get through the fiscal year that ends in June.

The governor has proposed a supplemental budget to lawmakers for next fiscal year.

Economists from the Council on Revenues told lawmakers that the state is in a slow recovery from the recession. But they cautioned that the council's current forecast — a 2.5 percent drop in tax collections this fiscal year — could underestimate the revenue decline, so they urged lawmakers to take a conservative approach to the budget.


The council's forecasts, by law, are used by lawmakers and Lingle when preparing the budget. The forecasts, however, consistently miss-ed the extent of revenue growth during surplus years and have not accurately tracked the steep decline during the recession.

Paul Brewbaker, the council's chairman, acknowledged that the forecasts have been off substantially. But he said no economist predicted the global financial collapse that led to the recession.

"Everybody was catching up," he said. "Nobody got this right."

State Sen. Donna Mercado Kim, D-14th (Hälawa, Mo-analua, Kamehameha Heights), the chairwoman of the Senate Ways and Means Committee, said lawmakers had significant concerns about the accuracy of the forecasts last year, but the council continued to miss the true revenue decline.

"We were all telling you guys, 'We don't think that you guys have gone low enough,' " she said.

Brewbaker and Bonham said the forecasts are not meant to be exact, but are the best estimates based on a range of economists' predictions.

Oshiro told reporters after the briefing that he was disappointed the Lingle administration appeared to be deferring major budget decisions involving state worker health and retirement benefits, Medicaid and even the delay in tax refunds, which will count toward the budget next fiscal year.

Lawmakers are also worried about how to plan for the so-called funding "cliff" when nearly $1 billion in federal stimulus money runs out in 2011.

Lingle is in the final year of her second four-year term as governor. She has said that her budget and financial plan positions the state for economic recovery, but Oshiro disagrees.

"This lame-duck administration is basically kicking the can down the road," he said.

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