Construction plan would spend $321 million on schools

By Kevin Dayton
Advertiser Capitol Bureau Chief

Gov. Ben Cayetano's effort to boost the state economy by pumping up state construction would inject another $321 million into public school projects, lawmakers were told last night.

Most of that money would be spent on the upkeep of public schools, with $255 million earmarked for school repair and maintenance projects, according to state budget Director Neal Miyahira.

Miyahira said that money will make a sizable dent in the $600 million backlog in school repair and maintenance projects.

In all, the Cayetano administration plans to ask lawmakers next year for authority to spend another $952 million on construction.

Miyahira said that money is needed to keep the state construction industry strong and stable at a time when other parts of Hawai'i's economy are struggling.

The House Finance Committee and the Senate Ways and Means Committee were briefed last night on the general outlines of Cayetano's budget proposal, which will be formally submitted to lawmakers next year.

Miyahira said the administration is not proposing layoffs because that could alarm the community and further hurt consumer confidence. In any event, Miyahira said, the administration finds state government to be about the right size today.

Cayetano's proposed new construction budget will include $308 million for the University of Hawai'i system. Almost half of that money, or about $142 million, would be used to pay for the University of Hawai'i's planned West O'ahu campus.

The construction budget would also include $64 million for a new courthouse for Hilo.

With state tax collections dropping off since the Sept. 11 attacks, the administration plans to impose cuts of about $16.5 million this year and $33.2 million next year. That includes about $7 million in cuts to the public schools' operating budget this year, and $14 million next year.

However, Miyahira said general treasury spending on public school instruction has increased steadily in the last decade, from $530 million in 1992 to $877 million this year. During the same period, he said regular and special education enrollment grew by less than 5 percent to 183,000 students this year.

Even after the budget cuts, total state general treasury spending will increase from $3.38 billion last year to $3.61 billion this year, according to statistics supplied by Miyahira. Spending will also increase next year to $3.87 billion despite the cuts.

The new budget proposal includes plans to double the state's liquor tax, which is already one of the highest in the nation. The extra tax collections would net the state treasury an extra $40 million a year.

Miyahira said it is also critical that the administration be allowed to spend the $213 million surplus in the the Hawai'i Hurricane Relief Fund. If lawmakers withhold that money, Miyahira said the state departments including the public school system would have to absorb deeper cuts.

That issue may be hotly contested at the Legislature next year because House and Senate lawmakers say they may not have the votes to tap the hurricane fund.

Lawmakers say many constituents have called to ask that the surplus in the fund be returned to the people who paid into the fund through their property insurance premiums. That may be difficult to resist in an election year, some said.

Amy Hayashi Hirano, a representative of the Hawai'i Independent Insurance Agents Association, said people paid into the fund believing the proceeds would be held in reserve in case another hurricane strikes the state.

"The fund should be used for the purpose for which the moneys were collected, to benefit the policy holders, your constituents," she said.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com or 525-8070.