State budget down $125 million

The Hawaii Council on Revenues today confirmed some lawmakers’ worst fears – there’s about $125 million less to spend than they thought for the budget year that's already halfway over.

The $125 million must be cut from the FY 2009 budget that ends June 30. Forecasters hope the economy will turn around in time for a 1-percent increase in the FY 2010 budget, but they aren't making any promises.

The projected 3-percent decrease in state revenues for the current FY09 budget is a drastic drop from the 0.5-percent decrease forecast just a few months ago. A percentage point equals about $35 million in revenues.

The cuts are going to be painful, hitting those who need help most. Education and entitlement programs such as those administered by the Department of Health and Department of Human Services account for a whopping 78.4 percent of the state operating budget.

Council on Revenues Chairman Paul Brewbaker will brief legislative money committees on the details of the budget downturn at 2 p.m. Tuesday in the Capitol auditorium. The Council reports its latest revenue forecast to the governor and the Legislature on June 1, Sept. 10, Jan. 10, and March 15 of each year.

Governor Linda Lingle wasn't surprised by the news.

"The Council on Revenues’ decision to lower projections is not unexpected given national and global economic conditions, as well as other external factors beyond our control that are impacting Hawaii," Lingle said in a statement. "The lower revenue projections reflect the challenges we will face as a state in the next couple of years, and underscore the need for all of us to work together. "

Hawaii is certainly not alone, according to the National Conference of State Legislatures, which says only 12 states aren’t expecting budget shortfalls.

“These budget gaps are approaching those seen in the last recession, which were the worst since World War II, and show every sign of growing larger,” NCSL Executive Director William T. Pound said in a statement. "While the data we collected from state legislative fiscal officers are pretty sobering, our discussions with legislative leaders tell us that they expect the problem to only get worse.”

(This article was edited 1/13/09 for clarification following new information).