Monday, December 22, 2008

Lingle presents slimmed-down budget

HONOLULU – Salaries will be frozen and Healthy Start prenatal health care and adult dental care programs abolished, but no state employee would be laid off under a reduced spending plan unveiled today by Gov. Linda Lingle.

The $11.1 billion FY 10 and $11.3 billion FY 11 operating budgets are a 3.8-percent and 3.3-percent reduction, respectively, over the base budget. But Lingle said the numbers represent a 14-percent reduction in discretionary funding over the two-year period.

Lingle also plans to tap into special funds – taking $36 million from the Deposit Beverage Container Special Fund, $9 million from the Wireless Enhanced 911 Special Fund and $40 million from the Emergency and Budget Reserve Fund – in order to balance the budget. The Legislature must agree to emergency appropriation bills in order for her to tap into those sources.

Lingle said she’d met with legislative leaders earlier in the day to present her budget proposal. The Legislature will use the budget as a base for its own deliberations, but doesn’t have to give the governor everything she wants.

“The world has changed and our fiscal situation has changed dramatically. That means it simply cannot be business as usual,” Lingle said during a news conference to announce her proposed budget.

“I believe that we will emerge stronger than we are now,” Lingle added, saying that the grim fiscal picture offers “great incentive to work together” with the Legislature in a collaborative fashion.

Lingle’s proposed cuts are in addition to cuts of $40 million proposed by the Department of Education and $13 million by the University of Hawaii System. Those two departments, combined with Department of Health and Department of Human Services, account for a whopping 78.4 percent of the state operating budget.

In addition to cutting spending and tapping into special funds, Lingle said the state would increase revenues by refinancing debt and collecting more taxes. While there would be no tax increase, Lingle said the state could collect an additional $122 million by stricter enforcement of taxes on cash transactions and tightening Act 221 investment tax credits.

A fast-tracked $3 billion public works program will also stimulate the economy and contribute to a healthy budget, Lingle said.