Legislators critical of budget-cuts scenarios

By Kevin Dayton
Advertiser Capitol Bureau Chief

Legislators heard hours of doomsday budget-cutting scenarios yesterday from state officials describing the consequences of a 5 percent cut in their budgets.

Even if lawmakers decided to accept those scenarios, the money saved would still offset only about half of the $315 million budget shortfall for this year and next, said legislative Finance Committee clerk Kevin Kuroda.

Critics said state bureaucrats are simply building a case for raising taxes or spending the cash reserves in the state's hurricane fund. Among them was Rep. Jim Rath, who said the state can cut spending without the kind of dire consequences outlined at yesterday's House Finance Committee hearing.

"What they're doing is taking the worst-case scenarios and throwing them out as a scare tactic to raid the hurricane relief fund and raise taxes," said Rath, R-6th (N. Kona, S. Kohala). "It's nothing more than a scare tactic."

Budget-cutting steps such as making kindergarten a half-day program, increasing elementary school class sizes and closing five public libraries are possible consequences of a 10 percent cut in discretionary spending. The 10 percent budget-cut scenario was offered for discussion by House Finance Committee staff, while state department heads described the possible consequences of a 5 percent cut.

Gov. Ben Cayetano has proposed a number of politically risky steps to balance the budget after the Sept. 11 attacks dropped the state economy into a slump and reduced state tax collections. They include doubling the liquor tax and spending a $213 million surplus in the Hawai'i Hurricane Relief Fund.

The governor knew those plans would hit opposition from both Democrats and Republicans, but predicted lawmakers would accept his proposals once they realized the devastating budget cuts that would be necessary otherwise.

House Democrats never seriously considered the proposal to double the liquor tax, but the proposal is still alive in the Senate. House Democrats are considering a proposal to double the state tax on cigarettes, but lawmakers generally avoid tax increases in an election year.

House Republicans, meanwhile, argue the state should refund the hurricane fund cash to people who paid insurance premiums into it. They argue the state should cut spending instead of using the fund to balance the budget.

Democrats in both the House and Senate are divided over what to do with the hurricane fund money, but House Majority Leader Marcus Oshiro, D-40th (Wahiawa, Whitmore), said yesterday the Legislature "must not foreclose any options to balance the budget unless the public is willing to give up some critical state services."

House Finance Chairman Dwight Takamine said he also wants to have the option of using at least some of the money in the fund, and increasing the tobacco tax if need be.

Takamine, D-1st (Hamakua, N. Kohala), told the Finance Committee that if lawmakers' objective is to reassure the public and boost consumer confidence, slashing government services might not be the best way to do it.

Cayetano intends to trim this year's budget by 1 percent of "discretionary" spending, and proposed that lawmakers impose additional cuts of 2 percent next year for a savings of almost $50 million.

Lawmakers asked state agencies to describe what would happen if they had to cut 5 percent of their discretionary spending next year, or about $83 million, not nearly enough to make up for the budget shortfall.

Department heads yesterday described major problems if lawmakers impose the cuts.

• The Department of Health would cut drug treatment programs for prison inmates, eliminate support for people with developmental disabilities and close at least one office, laying off eight employees.
• The Department of Land and Natural Resources would end its effort to eradicate marijuana grown on state land, while the attorney general's office would cut spending for child support enforcement and eliminate the federally required sex offender registration program.
• The Department of Human Services would reduce state assistance to the aged, blind and disabled, and reduce programs for troubled youth.
• The Department of Public Safety would recall inmates now serving time on the Mainland. To make room for those inmates, prison officials would have to allow early releases of inmates in Hawai'i.
• The University of Hawai'i would cut $14.3 million out of its $441 million budget for next year.
• The Department of Education would cut $36 million out of its $1.33 billion budget.

After years of budget cutting in the 1990s, "We believe we have cut as much as we possibly can, and we don't really see where else to go," said Susan Chandler Department of Human Services director.

Public Safety Director Ted Sakai said the American Civil Liberties Union already is questioning the practice of triple-bunking inmates at the O'ahu Community Correctional Center, and the state will risk a new lawsuit if it continues to jam convicts into crowded prisons.

Rath, a member of the Finance Committee, said Hawai'i residents have had to cut spending as they lost work, and government can do the same.

"These people have a vested interest in maintaining the size of government — of maintaining the size of their kingdoms — and when faced with real budget cuts, which they've been faced with before in prior budgets, they didn't cut the drastic things they said they would," Rath said. "They found a way to save a little money here and save a little money there. We're only talking about 5 percent."

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

Correction: Budget-cutting steps such as making kindergarten a half-day program, increasing elementary school class sizes and closing five public libraries are possible consequences of a 10 percent cut in discretionary spending. The 10 percent budget-cut scenario was offered for discussion Monday at the Legislature by House Finance Committee staff, while state department heads described the possible consequences of a 5 percent cut. A previuos version of this story gave other information.