Posted on: Sunday, December 28, 2003

GOVERNMENT
State spending, employment forecast to rise

By Sean Hao
Advertiser Staff Writer

A strong economy heading into 2004 is raising expectations of more state government spending and jobs.

Even though the gains anticipated are modest, they are an improvement over much of 2003, when worries of a budget shortfall led to spending and hiring restrictions.

The government belt-tightening, rescinded in September, came amid concerns that SARS and the Iraq war would cut into tourism tax revenues, as would tax credits given to spur technology investment and home and hotel construction.

Six months later, revenues in the current fiscal year are forecast to increase 5.2 percent.

Gov. Linda Lingle plans to boost state spending in the fiscal year that begins this summer by $86.8 million, or 2.3 percent. Much of the increase would go toward facilities repair and maintenance.

Spending may be tempered by the possibility that collective bargaining agreements being negotiated with four of the largest government unions could result in raises. Additionally, retirement system officials have said $80 million or more may be needed to meet the state's share of insurance premiums to cover worker benefits. And a recent report estimates it would cost about $500 million to overhaul the state's aging prison system.

Given these expenses, the Lingle administration plans to maintain strict controls over filling nonessential jobs. The governor's budget request supplementing the $7.7 billion 2003-2005 biennial budget includes only a handful of new positions, but allows for conversion of about 150 temporary positions to permanent status.

In November, there were 72,800 state jobs, compared with 72,300 in the same month last year.

For the federal government, jobs fell by 300 positions, to 31,100, according to the state Department of Labor and Industrial Relations.

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.