Plan adds $90M to budget

By Kevin Dayton
Advertiser Capitol Bureau Chief

State lawmakers would increase alcohol and tobacco taxes and boost state spending by about $90 million next year, under a budget plan tentatively approved by the House Finance Committee yesterday.

Despite the proposed increase in spending, House Finance chairman Dwight Takamine said the proposed budget would trigger layoffs of 114 state workers, including 86 in the University of Hawai'i system.

However, analysts for the Finance Committee said the UH layoffs may be avoided if university officials adjust their budget and impose cuts in other areas.

The House proposal advanced yesterday would authorize spending of about $3.56 billion next year, up from about $3.47 billion authorized for this year. Those figures do not include almost $110 million this year and almost $210 million next year for public worker pay raises.

Takamine said the budget adds jobs and money to the state lower education budget and imposes cuts in other areas to respond to a public sense that "there are certain concerns, certain issues that are critically important."

The administration and judiciary budgets approved by the Finance Committee yesterday would cut 19 employees from the state judiciary, eight more from the Health Department by eliminating the State Health Planning & Development Agency, and one from the Department of Public Safety.

"We've tried to strike a balance," Takamine said. "We know we had to to make cuts, we know we had to make reductions, we've done that." At the same time, lawmakers felt it was important to reassure the public by properly funding education and essential services for families coping with the tourism slump, he said.

The budgets approved yesterday now go to the full House for a floor vote, and then on to the state Senate for further revisions. The House and Senate will meet in conference committee in April to work out the differences between their two spending plans.

Lawmakers last year approved a more generous budget of almost $3.7 billion for next year, but have to cut back on that plan now because the tourism slump following the Sept. 11 terrorist attacks triggered a projected drop in state tax collections of more than

$300 million for this year and next year combined.

To help offset that decline in tax collections, the House is proposing to draw $100 million from the Hawai'i Hurricane Relief Fund, and to impose the tobacco and liquor tax increases.

Although the amounts of those tax increases have not been finalized, lawmakers have proposed boosting tobacco taxes by about 20 cents a pack to raise an extra $8 million a year, and proposed boosting liquor taxes to raise an additional $20 million a year.

"It's probably dangerous to raise taxes in any year, but I think that looking at all the circumstances ... certainly if anything, sin taxes tend to be one area where people generally are more open if there has to be any kind of tax increase," said Takamine, D-1st (Hamakua, N. Kohala).

House lawmakers are refusing to go along with Gov. Ben Cayetano's plan to borrow and spend about $950 million on various construction projects because they worry that would saddle the state with too much debt, Takamine said.

Republican Rep. Mark Moses questioned the need to lay off state employees, noting that members of the GOP offered the Democrats a list of more than 5,000 vacant state jobs, and suggested they eliminate some of those to cut costs.

"Why didn't they just cut vacant positions, that's what I wonder," said Moses, R-42nd (Kapolei, 'Ewa Village, Village Park). "If there's a body in there that is doing a job that is core and necessary, then he should be in there."

Finance Committee staff said they did eliminate almost 120 vacant positions.

Rep. Charles Djou, the only member of the Finance Committee to vote against the budget, said the budget proposes to spend too much.

"The bottom line is our current Hawai'i state economy quite simply cannot support our state government," said Djou, R-47th (Kahalu'u, Kane'ohe). "When you look at it at the end of the day, we are spending more money, we are increasing the number of government workers, and that's not the direction I think our government should be going in."

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