State lawmakers yesterday signed off on a $10.7 billion state budget for next fiscal year that trims Gov. Linda Lingle's spending requests by more than $44 million because of concerns about the economy.

The budget contains $5.3 billion in general fund spending, with most new money aimed at education, healthcare and housing. A separate $1.4 billion in capital improvement project spending includes repair and maintenance money for the University of Hawai'i and K-12 public schools, although less than lawmakers and educators had wanted to meet backlogs.

State Sen. Rosalyn Baker, D-5th (W. Maui, S. Maui), the chairwoman of the Senate Ways and Means Committee, described the budget as an "honest, responsible and sustainable supplemental budget. This budget does not create false impressions, and should not give rise to false expectations."

State Senate Minority Leader Fred Hemmings, R-25th (Kailua, Waimanalo, Hawai'i Kai), complained that budget restrictions on the Lingle administration's spending of federal welfare money are unnecessary and would harm the most vulnerable. The budget restricts the administration from spending $22 million it had planned for next fiscal year because lawmakers want to maintain a healthy reserve in case welfare caseloads increase.

"The money left sitting on the table is wasted," Hemmings said.

In the House, state Rep. Joseph Souki, D-8th (Wailuku, Waihe'e, Waiehu), chided majority Democrats for being too conservative and leaving it to Republicans to warn about less money for education and the needy. "We've switched roles," he said.

The House and Senate stacked final votes at floor sessions yesterday, with more to come tomorrow, the last day of the session.

Among the more significant votes yesterday involved state harbor improvements, a public-financing experiment for Big Island County Council campaigns, and a temporary health insurance program for children of workers who have recently lost their jobs at Aloha Airlines and other Hawai'i-based companies.

Lawmakers approved an $862 million plan to upgrade state harbors over the next six years despite some reservations in the Senate that Aloha Tower Development Corp., which has had a troubled management record, will oversee the modernization.

"This is a landmark piece of legislation," said state Sen. J. Kalani English, D-6th (E. Maui, Moloka'i, Lana'i), who described it as the best opportunity in a generation to get the harbor work completed.

A pilot project for public financing of Big Island County Council campaigns would start in 2010 and cover three election cycles. "I think this bill was a long time in the making," said state Rep. Della Au Belatti, D-25th (Tantalas, Makiki, McCully). "I really appreciate the approach taken by both the House and the Senate to implement a pilot program so we can see if publicly financed elections will work."

But state Rep. Gene Ward, R-17th (Kalama Valley, Queen's Gate, Hawai'i), said he changed his mind on the pilot during floor debate, calling it a "slush fund" that might benefit incumbent politicians more than new candidates.

"Are we going to give more public funding to more incumbents to become more ingrained?" he asked.

A temporary health insurance plan to provide discounted coverage to the children of Aloha Airlines' workers was expanded to cover children from other Hawai'i-based companies that have recently declared bankruptcy or gone out of business. The coverage would be through a new program between the state Department of Human Services and the Hawai'i Medical Service Association meant for uninsured children not covered by the state's medical insurance for the poor or private insurance.

The coverage would only extend to the end of the year and is limited to the amount of money lawmakers had previously put aside for the state and HMSA program.

Lawmakers also gave final approval to the creation of an Early Learning Council for an early childhood education initiative and a commission to evaluate whether to close or consolidate public schools.

Lawmakers in both chambers voted to shelve a bill that would have restricted political campaign signs on residential property to 4-by-2 feet and a total of 16 square feet for all signs. The bill was important to The Outdoor Circle and cleared a House and Senate conference committee last week. But support for the bill fell apart in private caucus.

The Senate at first voted to pass the bill yesterday but then reconsidered. State Senate Majority Leader Gary Hooser, D-7th (Kaua'i, Ni'ihau), explained that the bill would have applied to other signs, such as advertisements for chicken sales or fan support for University of Hawai'i sports, and would have interfered with county home rule.

Hooser made a personal commitment to work with Outdoor Circle and others before next session on a new draft.