Senators deciding on budget
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Chart: State spending proposals
By Kevin Dayton
Advertiser Capitol Bureau Chief
Lawmakers would spend $55 million from the hurricane fund and double the state tax on cigarettes, but would avoid laying off state employees under a spending plan tentatively approved by senators yesterday.
Senate Ways and Means Chairman Brian Taniguchi noted that lawmakers have rejected a number of proposals by Gov. Ben Cayetano to increase revenues, and warned his colleagues of serious consequences if that pattern continues.
"Should we find ourselves without the option of increasing our revenues in some manner, additional cuts — cuts to education, cuts to human services, cuts to all government services — will be necessary," said Taniguchi, D-11th (McCully, Mo'ili'ili, Manoa).
But Sen. Sam Slom, R-8th (Wai'alae Iki, Hawai'i Kai), said the plan approved yesterday would increase spending, increase the public debt and increase taxes.
"Even though we're talking about cuts, we're talking about cuts to anticipated increases, so we're using semantics in many respects," said Slom. "This government continues to grow."
The Senate budget approved yesterday also includes $385 million for state construction projects, which is far less than the $952 million that Gov. Ben Cayetano wants to spend as a way to create jobs and stimulate the economy. The House approved an even smaller construction budget of about $340 million.
House and Senate lawmakers will meet later in conference committee to try to reconcile their spending plans.
Lawmakers approved a considerably more generous spending package last year, but have had to cut back on those plans since Sept. 11.
The tourism slump that followed the terrorist attacks slowed state tax collections, meaning lawmakers have about $300 million less to spend than they expected.
To help offset that drop in tax collections, the House has proposed drawing $100 million from the Hawai'i Hurricane Relief Fund and raising taxes on tobacco and liquor.
Yesterday senators approved a modified version of that proposal to draw only $55 million from the hurricane fund to balance the budget.
Senators voted to combine the hurricane fund transfer with House Bill 2654, which provides money for some very popular programs, including $20 million for public schools and $2 million for the University of Hawai'i.
That means if lawmakers vote down the transfer from the hurricane fund, they also cut spending for public education, something they are very reluctant to do.
Taniguchi said that if lawmakers agree to a tobacco tax increase contained in House Bill 2741, it will generate enough money for the state to repay the $55 million to the hurricane fund over the next six years.But he acknowledged that the bills approved yesterday do not require lawmakers to repay the fund.
"I don't know how the public can trust us," said Slom, who opposed the transfer from the hurricane fund. Slom said the fund was set up for a specific purpose — to provide insurance coverage to protect against hurricanes — and should be used for that purpose or refunded to the people who paid in.
Sen. Jonathan Chun said the fund has served its purpose and can be tapped now that private insurers are offering hurricane coverage in Hawai'i.
"We need to have additional funds to balance this budget, and we need to look at all avenues" said Chun, D-7th (S. Kaua'i, Ni'ihau). "If the members don't feel they can support this, then I would ask the members to specifically state where they're gonna cut. Tell me what libraries we're going close, tell me what schools we're going to stop funding, tell me what classes we're going to have cut, tell me what UH program has to go."
Sen. Donna Mercado Kim, who opposed the hurricane fund transfer, argued that by assuming they can simply transfer tens of millions of dollars from the hurricane fund, lawmakers are not taking a serious look at alternatives.
"We need to take control of this now, we need to look for other methods now, and we need to do it now, said Kim, D-15th (Kalihi Valley, 'Aiea).
Reach Kevin Dayton at kdayton@honoluluadvertiser.com or 525-8070.
