Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Wednesday, January 20, 2010

Saddle up for a ride to fiscal rescue

By Jerry Burris

There have been gloomy times facing the Hawai'i Legislature in the past as it convenes for its regular session. Think the aftermath of the oil shock of the 1970s or the post-9/11 funk.

But it is hard to imagine a tougher time for legislators than the one facing them as they convene today for their 2010 session.

The economy is shuddering. No fresh ideas are on the table at the moment and the demand from concerned citizens for continued services remains undiminished.

As a sign that they "get it," legislators have decided to forgo most of the traditional hoopla that normally goes with opening days. No big parties, no lavish displays of flowers (expect a few lei in any event) and not much hospitality in the form of free food and drink.

That's nice symbolism. But the real test will be whether the Legislature, collectively, has the will and the way to deal with a state in a serious financial mess. In terms of sheer scale, it is nothing approaching the size of the slump facing California or some other Mainland states.

But as Advertiser government writer Derrick DePledge reported, a budget shortfall of some $1,200 for every man, woman and child in Hawai'i will be hard to fill. Do you have an extra thousand bucks or so to cough up for every member of your family?

At one level, the choice facing legislators is simple. They just have to take the amount of money they have as projected by the Council of Revenues and then apply it to the state budget. There is a $1.2 billion gap there.

So, cut state spending by $1.2 billion or raise taxes by that amount. Simple enough, it would seem, but daunting when it comes to the reality of practical politics.

Senate President Colleen Hanabusa acknowledges that Gov. Linda Lingle and her staff have already identified the low-hanging fruit when it comes to spending. It is easy to talk about saving dollars by cutting out "waste and abuse," but that largely has been done.

The protest rallies and general howling suggest they are already cutting into red meat.

There are now no easy choices. For instance, Lingle's proposed budget includes the idea of cutting state support for life insurance premiums for retired state workers as well as eliminating state payments for Medicaid (Part B) benefits for the spouses of former state employees.

Talk about a knife in the heart of what is likely the most loyal political demographic within the core Democratic constituency.

Does this mean Lingle is cruel or uncaring? Hardly. But since she is so committed to the fundamental Republican philosophy that tax hikes are the worst medicine for an ailing economy, she has no real choice.

So what will Democrats, who control both houses of the Legislature, decide to do? Likely, they will raise taxes, but by another name. Often, it will be nothing more than a shell game. For instance, if the state decides to keep hotel room taxes rather than sharing them with the counties as it does today, the counties will be forced to cut services or raise their only real tax that on real estate.

The other option is to convert hidden taxes, fees and other surcharges applied to prop up special funds (and there are hundreds of millions of dollars available here) into general fund revenue. That will keep the ship of state afloat but will mortally offend all kinds of special interests.

In the end, the Legislature will patch things together to get through another budget year. Not pretty, for sure. But better than the awful choice that would inevitably toss some political careers into the flames.