Governor Ben Cayetano, a Democrat, proposes a state budget of $3.61 billion ($3,610,000,000) for fiscal year 2003, which actually begins this year on July 1. His chief bean-counter, Neal Miyahira, state director of finance, goes out of his way to
Governor Ben Cayetano, a Democrat, proposes a state budget of $3.61 billion ($3,610,000,000) for fiscal year 2003, which actually begins this year on July 1.
His chief bean-counter, Neal Miyahira, state director of finance, goes out of his way to point out that higher and lower education will consume over half the executive budget. And that the cost of paying state employees, and paying pensions and benefits to those state employees who have retired, will occupy an increasingly important percentage of current and future state budgets.
Beginning Thursday, when the Legislature convenes the 2002 session, state lawmakers must hammer out and approve a balanced state budget amidst loud cries from human-services agencies and providers for more money to help the neediest state residents. That’s compounded by:
– The economic doldrums increased by the events on and since Sept. 11.
– Heavy pressure expected to be exerted for and against allowing legalized gambling in the state.
– The economic realities that the state will have $163 million less to meet everyone’s needs in the upcoming fiscal year ($315 million for the state’s two-year budget cycle).
Cayetano, in the wake of projected continued declines in state revenues, has proposed a few fixes, including moving the $213 million from the Hawai’i Hurricane Relief Fund into the general fund. Doing so would deplete that disaster-response account. That idea was soundly pooh-poohed at public hearings held statewide, including last Monday on Kaua’i, by the Legislature’s money committees.
Cuts to every state department, tentatively set at 1 percent for fiscal 2001-02 and 2 percent in 2002-03, are another Cayetano proposal.
But in Miyahira’s budget presentation, which state Sen. Jonathan Chun (D-Kaua’i) said has changed at every hearing, one slide illustrates that the $163 million in cuts needed to balance the fiscal 2003 budget are the equivalent of the total budgets of nine of the smaller state departments, and three additional agencies, including the entire executive branch and libraries section of the Department of Education.
Miyahira notes there are thousands of vacant positions in state government. But considering the skyrocketing cost of salaries and benefits for current and former state employees, state government is about the “right size,” he said.
That government is the right size based on public expectations is one of four “assumptions and approaches” to the administration’s balanced financial plan.
The others are viewing the economic downturn as a temporary malady, providing an economic stimulus that is now expected to reap economic benefits (taxes on additional wages flowing into the state general fund, for example) as well as keep the state’s construction industry “vibrant,” and proposing fiscal actions that should not cause drastic disruption to public services and reduce public confidence in the economy.
Services deemed essential will not be curtailed, Miyahira said.
Other givens are that:
– Complying with the Felix consent decree (for education services to special-needs students) will increase costs to both the education and health departments.
– Interest and principal payments on already accrued state debt will get more and more expensive over time.
– And social services will also become more costly at a time when more of the state’s residents find themselves in need.
The state contends it can avert painful budget cuts by using the $213 million in the hurricane fund. Without it, the state will be over $8 million in the hole at the end of fiscal year 2003, nearly $120 million in the red after fiscal 2004, and $159 million in negative numbers after fiscal 2005.
Revenue-generating measures, like doubling the tax on liquor (generating an additional $40 million a year in state revenues), capping hotel-room tax revenues going to the Hawai’i Tourism Authority ($10 million a year beginning in fiscal 2004), allowing appropriated but unencumbered funds to fall back into the general fund ($20.9 million in fiscal 2004), and other ideas to decrease expenditures, are being explored to balance the budget.
Staff Writer Paul C. Curtis can be reached at mailto:pcurtis@pulitzer.net or 245-3681 (ext. 224).
