Editorial
Governor braces state on its fiscal problems

Gov. Cayetano has rolled a political grenade into the laps of state lawmakers as they gear up for their 2002 session, which begins later this month.

The state's finances, Cayetano said, are in such poor health that serious medicine is in order. His most politically sensitive suggestion is to scoop up the $213 million sitting in the Hurricane Relief Fund and pop it into the general fund, to cover ongoing costs of schools, hospitals and other state business.

Without that transfer, Cayetano says, the state financial plan will soon sink seriously into the red. And since the state constitutionally must balance its budget, the only choice will be deep cuts in existing programs or substantial hikes in taxes.

He paints a dark picture of severe cuts, layoffs and other reductions that will — in the long run — do more harm to the state's economic health than it will help us out of our current budget mess.

At first blush, it would seem that tapping the hurricane fund is the most painless way out of the problem. After all, the money is just sitting there, insurance companies are back in business again selling hurricane coverage and the "benefit" of the backup fund to local residents has already been obtained.

But Cayetano knows, as do the legislators, that the voters see the $213 million as "their" money. If it is no longer needed, they'll say, give it back.

Others argue that the fund was designed as a backup system for times when regular insurance is unavailable. That scenario is likely to happen again, they say, so the fund should be kept in place for that day.

The governor makes a relatively persuasive case for using the fund, but it is a case that rests more on logic and budgetary necessity than political emotion. It will be a tough sell at the Legislature.

Lawmakers can rightfully make the argument that dipping into the fund is yet another example of crisis budgeting that fails to meet the underlying disconnect between what the state feels it needs to spend and what it raises in taxes.

If that's the case, then it is time for the Legislature to step away from its usual reactive position and come up with a plan of its own. Identify, specifically, what could be cut to make up for the red ink or offer other ways of pumping up the general fund.

In some ways, the unexpected post-Sept. 11 financial crisis offers an opportunity for a new level of budget discipline at the Capitol. The governor has offered his ideas. If they won't fly, lawmakers must do more than simply shoot them down.

They must have alternatives.