Gov. Linda Lingle will have to find another $90 million to close the state's budget gap before the fiscal year ends in June, after the state Council on Revenues yesterday again lowered its revenue forecast.

The council estimated a 5 percent decline in revenue through June, down from 3 percent in January, carving out a $90 million hole. The lower forecast also drops the baseline for the two-year budget, which will force the governor and state lawmakers to change a budget draft now moving through the state Legislature.

The council also lowered its estimate for fiscal year 2010 — to 0.5 percent growth instead of 1 percent growth — which strips away an additional $22.5 million in projected revenue. The council, predicting the economy will rebound, raised the estimate for 2011 to 5 percent growth, up from 3.5 percent, for a $67.5 million gain.

Cumulatively, the new forecast adds well over $200 million to the budget shortfall for this fiscal year and the two-year budget cycle.

Lingle would not say yesterday how she will respond. She said she would evaluate the forecast and present a detailed financial plan to lawmakers in the coming weeks.

"I remain committed to balancing the budget without raising taxes or laying off employees," the governor said in a statement. "Either of these actions would further weaken our economy."

The Republican governor's insistence over the past week that tax increases and, to a lesser extent, state worker layoffs, are off the table in budget talks has punctured the tenuous collaboration with lawmakers from earlier in the session.

The state House has prepared a two-year budget draft that uses a combination of spending cuts, layoffs and tax increases to close the deficit. The state Senate, which will have to calculate for the new forecast when it gets the budget from the House next week, has kept alive bills that would raise the general excise tax and hotel room taxes as options.

Last week, when Lingle updated her plans to deal with the shortfall, lawmakers mostly held back in their criticism that her assumptions included bills that have stalled in committee and health-benefit cuts that have to be negotiated with public-worker unions.

But now that Lingle has drawn the line on taxes and layoffs, frustrated lawmakers are openly calling the governor's numbers half-baked.

State House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo Valley, Wilhelmina Rise), said the governor had said everything should be on the table but that it has been lawmakers who have made the politically difficult moves.

In addition to the layoffs, the House has advanced bills that would increase state income taxes on higher-income residents, raise taxes on cigarettes and divert hotel-room taxes from the counties to help with the budget.

"We're taking the brunt of the criticism in trying to be responsible," said Say, who personally floated cuts to public worker benefits that were rejected by his colleagues.

OPTIONS CONSIDERED

State Sen. Donna Mercado Kim, D-14th (Halawa, Moanalua, Kamehameha Heights), the chairwoman of the Senate Ways and Means Committee, said she did not necessarily agree with the choices in the House's budget draft, particularly the layoffs of 374 state workers, but would consider all options.

Kim said Lingle has not given lawmakers a balanced budget. "She cannot balance her budget based on saying, 'I'd like to do this,' " Kim said, referring to the proposed health-benefits cuts for state workers. "She has to give us something more."

The Senate approved a bill yesterday that would raise the general excise tax to help close the deficit, fund public education and provide tax breaks to low-and-middle income residents. Kim said she reluctantly agreed to the bill as an option even though she knows a GET increase would be difficult on residents and businesses.

"As I've said from day one and I will say it today: That is my last resort," she said. "I do not want to raise the GET. I know how hard that's going to be on businesses."

Say has also said he would prefer not to raise the GET.

During Senate floor debate on the bill, state Senate Minority Leader Fred Hemmings, R-25th (Kailua, Waimanalo, Hawai'i Kai), said raising the GET, along with hurting businesses, would be regressive on the poor and would likely not be offset by tax breaks. Raising the GET to fund public education, he said, would waste money because of the "black abyss" of an ineffective state Department of Education.

State Senate Majority Leader Gary Hooser, D-7th (Kaua'i, Ni'ihau), criticized what he described as the Lingle administration's "Edward Scissorhands" approach to the budget, with cuts to health and social service programs to the most vulnerable.

SPENDING RESTRICTIONS

While Lingle and lawmakers will have until the session ends in May to work through the two-year budget, the new $90 million hole for this fiscal year is more immediate.

The governor has already made across-the-board spending restrictions to state departments, imposed a general hiring freeze, limited out-of-state travel, dialed back program spending, and asked for most of the money in the state's rainy day fund to get through the year. She has said she would likely not recommend furloughs for state workers after watching some of the difficulties that happened with furloughs in California.

"It means that the governor has to work on fixing the deficit she's facing right now over the next three months," said state Rep. Marcus Oshiro, D-39th (Wahiawa), the chairman of the House Finance Committee. "An additional $90 million that she needs to find now. Not later on, now."