State spending limits to continue
By Gordon Y.K. Pang
Advertiser Capitol Bureau
Statewide spending restrictions will resume when the new fiscal year begins Thursday under new mandates set down by Gov. Linda Lingle.
Besides a yearlong reduction in financing available for state departments and agencies, Lingle wants to hold off on financing commitments made to nonprofit agencies for at least the next three months, a decision that has at least one key Democrat worried.
The latest round of fiscal belt-tightening begins despite even the governor's acknowledgement that economic growth is more robust than first believed, a development that has a significant bearing on the state's financial picture.
Both Lingle and Budget Director Georgina Kawamura said caution is necessary given the long-term picture of state finances.
Lingle's proposals are expected to save the state about $20.5 million over the course of the year.
The administration is imposing on all state departments a 1 percent, across-the-board restriction on all general fund discretionary expenses.
Additionally, the governor wants to continue "targeted restrictions" first imposed on several agencies.
The administration also hopes to achieve savings by allotting financing for only 90 percent of the cost of collective bargaining increases.
The restrictions are set for the year and won't be reconsidered, the governor said.
The state Council on Revenues, which issues projections used by the state to determine how much it has to spend in a given year, last gave a forecast showing a 5.2 percent increase for the year ending June 30 over the previous 12 months.
Lingle said she believes total revenues will come in at least 1 percent higher, which would amount to at least $30 million to $35 million more into the state treasury.
In calling for the restrictions, however, Lingle said the increase is small compared to the anticipated cost increases over the next several years for government worker pay raises, debt service, the state retirement system and employee healthcare.
House Majority Leader Scott Saiki, D-22nd (McCully, Pawa'a), questioned the need for any restrictions since the budget is balanced despite earlier criticisms by Lingle that it would not be.
Saiki said he is particularly disturbed by the decision to withhold financing for nonprofits, a move some agencies have already expressed concerns about.
Many of the agencies, he said, "need assistance and need it now."
Lingle said she wants to restrict grants-in-aid financing to nonprofit agencies until September, when the Council on Revenues next meets.
Lingle said the agencies should not be presumptuous. "I think some of these organizations have gotten into a habit of assuming they're going to get the money on July 1," she said.
Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or at 525-8070.
