Monday, January 5, 2009

Grim budget news, times 10

Gov. Linda Lingle has proposed a budget that assumes the economy will dip only half a percentage point during the fiscal year that ends June 30. But lawmakers said Monday they’re expecting revenue losses to be 10 times that.

The House Finance and Senate Ways and Means committees held a combined informational session where the Republican governor’s budget director, Georgina Kawamura, briefed them on the Administration’s 2009-2011 spending plan. Briefings on specific departments continue through the week.

But the Council on Revenues, when it meets Friday, could render the current spending plans obsolete. Tax collections have been down 2.6 percent during the first five months of the fiscal year, and the year could end up down 5 percent over the previous year.

That would be $225 million less on a roughly $11 billion budget, compared with the $22.5 million the governor was working with.

If so, an administration spending plan that already cuts 14 percent of discretionary spending could be forced to slice deeper – much deeper.

Democratic majority lawmakers, as expected, had plenty of questions.

But several of them focused on Lingle’s restructuring of the state’s bonds to push about $300 million in annual debt payments eight years into the future, when she will no longer be in office.

“To me, it’s somewhat misleading,” said Senate Majority Leader Gary Hooser, D-Kauii, Niihau. “We’re just extending our debt.”

“We’re deferring it; we’re not saving it,” said Senate Ways and Means Committee Chairwoman Donna Mercado Kim. “We’re leaving it to the future to pay it … So it’s not a true savings.”

The Administration will do whatever is necessary to balance the budget, said Kawamura. It’s an ongoing process, she said.

“We cannot do it by cuts alone,” Kawamura said. “It is agony for us in regards to what we have to do every day to get a balanced fiscal plan.”