Posted on: Friday, November 16, 2001

Cayetano wants to use cash reserves to balance budget

By Kevin Dayton
Advertiser Capitol Bureau Chief

Gov. Ben Cayetano believes the state will not have to require public workers to take furloughs to balance the budget if lawmakers allow his administration to tap the state's cash reserves, including the $213 million in the Hawai'i Hurricane Relief Fund.

Cayetano said he isn't certain furloughs can be avoided, but said he believes the cash reserves along with a state hiring freeze and other efforts should keep state government afloat until the business climate picks up again.

On Wednesday a panel of economists predicted the slump triggered by the Sept. 11 terrorist attacks means the state will collect about $150 million less in taxes this year than was expected.

Republicans yesterday urged Cayetano to call the House and Senate back into special session to adopt an excise tax "holiday" when shoppers will be able to avoid paying the 4 percent excise tax.

House Republican Leader Galen Fox R-21st (Waikiki, Ala Wai) said the tax break will put more money in consumers pockets, which will boost the state economy.

Cayetano rejected the tax holiday idea, calling it "politically charged." He said he will meet with House Speaker Calvin Say D-18th (Palolo, St. Louis, Kaimuki) and Senate President Robert Bunda D-22nd (Wahiawa, Waialua, Sunset Beach) to discuss the state's financial situation, and the possibility of a fourth special session this year may come up.

However, Cayetano noted that "we are fairly close now to the regular session, and it may not be necessary to go into a special session" now. The regular session is scheduled to convene Jan. 16.

Some people who paid into the hurricane fund by buying insurance coverage have said the state should return the $213 million to the people who paid the money in.

Cayetano disagreed, saying the money "is just sitting there, waiting for the next hurricane. The next hurricane is now, so we should consider that. I've never understood why the Legislature has been so reluctant to use those monies."

Randy Perreira, deputy executive director of the Hawai'i Government Employees Association, said the union has not received any proposal for furloughs, and that furloughs would be a subject for negotiations.

"At this point, we would welcome the opportunity to have a detailed conversation with him ... about the state finances and the budget," Perreira said. "There may be different alternatives available, and we want to be able to discuss the range of options and have everything on the table it it comes to that."