Thursday, January 29, 2009

Federal bailout: Will it help Hawaii?

Will the economic stimulus package that passed the U.S. House yesterday help state government balance its budget? Depends whom you ask.

A lot, says U.S. Rep. Neil Abercrombie, D-Hawaii.

Abercrombie says the state would see more than $2.3 billion from the House’s version of the bailout. The U.S. Senate is expected to vote on a measure next week.

“Our legislature is facing huge gaps between the demand for the basic services and the money to pay for them: state funding for schools, unemployment benefits for those whose jobs have disappeared, and funding to keep the most basic medical care available for people who have nowhere else to turn,” Abercrombie said in a statement.

Not so much, says the Washington, D.C.-based Center on Budget and Policy Priorities.

The public policy group says the amount that would go to states to help them maintain current activities is approximately $150 billion to $155 billion — or roughly 40 percent to 45 percent of projected state deficits.

“A substantial amount of funding in the House package beyond the $150 billion to $155 billion would flow through states or be administered by them.,” the group said in a Jan. 26 article. “But states would not be allowed to apply these other funds to the $350 billion in estimated budget shortfalls, a figure that represents the gap in state operating budgets and does not include local government shortfalls.”

Only with more budget cuts, says Gov. Linda Lingle’s Finance Director, Georgina Kawamura.

Her Jan. 27 letter to Senate Ways and Means Chairwoman Donna Mercado Kim balances the budget with an additional 2-percent across-the-board cut in discretionary spending and by increasing the withdrawal from the rainy day fund from $40 million to $60 million.