Boost to budget likely small

By Gordon Y.K. Pang
Advertiser Capitol Bureau

The revenue picture for the state general fund is looking rosier than it did at this time last year, but the Lingle administration and lawmakers say don't expect any loose change lying around when deliberations start next month on the supplemental budget.

LINGLE

KAWAMURA

"We are looking at critical programs that need additional funds," Kawamura said last week.

While she would not provide specifics on the budget before its release, she noted "these will be things that are quite visible and needed in our community."

Lawmakers are being told by their analysts to expect at least a slight increase in available dollars. The state got an $80 million infusion of federal dollars during the summer that was not factored into the budget, although $30 million is earmarked for Medicaid. The administration also is carrying over from the past fiscal year a larger-than-expected cash balance.

Additionally, the growth in tax collections anticipated by the Council on Revenues, whose projections are used by the Legislature in determining the budget, is 6.2 percent for this year and 6.9 percent for next year. That's more than projected when the Legislature approved the budget in May.

But exactly how much more money that will put into state coffers is unclear.

The council meets again tomorrow, the same day the administration submits the budget. Any revisions in forecasts won't factor into the administration's budget, but will come into play as the Legislature deliberates. Another forecast is due in March.

Kawamura no longer has to find $175 million in savings to avoid tapping into the Hawai'i Hurricane Relief Fund as Lingle insisted she do last year. Gone also are a hiring freeze and budget restrictions on discretionary spending on all state agencies that were imposed about this time last year.

Kawamura acknowledged that "overall, I think we're looking at slightly higher estimates in revenues from the Council on Revenues compared to where we were last year, and we're not having to make up the difference in the Hurricane Relief Fund."

Nonetheless, she said, "we are being cautious in what we are presenting, which is why there are not too many new things, but a concentration on our critical needs."

Several weeks ago, Lingle said that her staff had told her there would be about $90 million in additional revenues. But that does not take into account consent decrees and some $31 million to restore money for the state hospital system, which the Legislature left unfinanced when it approved the budget.

"We're really not looking at that much money," she said, noting that she and Kawamura have had to turn down much more departmental requests than they'd like.

Senate Ways and Means Chairman Brian Taniguchi, D-10th Manoa, McCully), said he believes the Legislature will also need to come up with money for the Department of Education and the University of Hawai'i system, which is expected to be allocated $50 million and $20 million less, respectively, than they had sought from the administration. "That's a concern," Taniguchi said.

Also still unresolved is the possibility that collective bargaining agreements being negotiated with four of the largest government unions in the state will result in raises, Taniguchi said. "We want to see how much the governor is going to be setting aside in the budget for it," he said.

State retirement system officials, meanwhile, have told lawmakers they may need to find an additional $70 million to $80 million or more to meet the state's share of insurance premium payments, Taniguchi said.

A recent report on the prison system estimates that it would cost about $500 million to overhaul its aging facilities but only seed money for planning and design will be needed now and will come out of the separate capital improvements budget, Taniguchi said.

House Speaker Calvin Say, D-20th (St. Louis Hts., Palolo, Wilhelmina Rise), also sounds cautious, echoing the need to provide more money for the employee retirement fund, the Department of Education and the university system.

Say said he also has yet to find out how much highly publicized educational governance reform packages will cost or hear the price for programs aimed at fighting crystal methamphetamine use.

"There are a lot of big-ticket items I see on the horizon and I think we have to take a much more fiscally disciplined approach," Say said. "Just one international incident may cause a downturn in our tourism industry."

Meanwhile, at least one watcher of the economy is also skeptical about increased revenues. Lowell Kalapa, president of the nonprofit Tax Foundation of Hawai'i, said tax collections during the first five months of the year are only 1 percent higher than that of a year ago, far short of the 6.2 percent estimated by the Council on Revenues.

"I don't have any real confidence that tax revenues are going to hit (6.2 percent) unless there's something we don't see," Kalapa said. "I don't see any major changes in visitor projections or big conventions."

Taniguchi and Say are more optimistic, however, and said that tax revenues tend to climb toward spring and early summer, near the end of the fiscal year.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or 525-8070.