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The Honolulu Advertiser
Updated at 6:42 p.m., Friday, March 13, 2009

Deepening fiscal hole underscores needs of poor

There are times when elected leadership must bring great satisfaction. Now is not one of those times.

The job of lawmakers and executives at every government level this year — and almost certainly into the next — will be painful and thankless, because there's so much bad news to deliver.

Public employees' pay? There's no money for raises, and further cuts into labor costs — layoffs, furloughs, pay or benefit reductions, or some combination — increasingly seem unavoidable.

Maintenance of the status quo in government services? Forget about it. Both the administration and the state House, which moved along its version of the biennial budget last week, pledge to carve carefully to preserve core services. But with the state ratcheting revenue projections down another notch on Thursday, changes surely will be noticeable.

That means it's more important than ever that the Lingle administration and Legislature collaborate on what should be the prime directive: keeping the social-services safety net intact.

Unfortunately, any gossamer threads of cooperation that existed at the start of the session had dissolved by the time the Council on Revenues made its grim announcement. The panel forecast the budgetary chasm between income and expenses dropping $90 million deeper.

When the Senate takes its turn at the budget proposal, House Bill 200, it would be wise to revisit some of the proposed House cuts and how they may diminish critically needed services to the economically disadvantaged. That's a constituency that's sure to grow as the recession bottoms out.

House committees critiqued the governor's budgets while developing their version, finding fault with some of the specific projects funded by the Department of Human Services. For example, one cited contractor was hired to "integrate services and maximize federal revenue use, a function that, the House suggested, DHS could do itself.

In fact, it would be wise for the Senate and the administration to give a critical eye to all DHS projects in deciding where further trims could be made.

But leaders also should heed the observation of Debbie Shimizu, executive director of the National Association of Social Workers' Hawai'i chapter, that any social services agency will have to bear up under increasing strain and will need the staff and resources to handle the demand.

And they will need to proceed with care in cuts to the mental-health services that until recently were held under a court-ordered federal magnifying glass. An immediate budget shortfall already has led the state to trim a contract for services at Kahi Mohala Behavioral Health.

When seeking other ways to reduce expenditures, policymakers should work especially hard with the unions, which may be willing to make concessions if it means preserving more jobs. Despite the governor's concern about the chaotic results of furloughs in California, Hawai'i's state system is far smaller, making the execution of such a cost-saving measure easier to plan and manage.

On the revenue side, increases in taxes should be viewed as a risky operation, best carried out in limited sectors of the economy. A boost in the general excise tax, a burden carried disproportionately by the poor, may create more problems than it solves.

Ultimately the budgetary challenge is not to spread around the fiscal pain in an even layer but to insulate as much as possible those areas in health, education and social services that are most in demand, and most vulnerable, during this period of economic distress.