The state is facing a $1.3 billion shortfall from now until the conclusion of fiscal year 2013. This fiscal year, ending June 30, 2011, state lawmakers estimate a $232 million budget gap.
This week, Gov. Neil Abercrombie issued a 10 percent spending cut for state departments until June 30. But for fiscal year 2012 and 2013, Abercrombie proposes a $758 million increase to the $4.943 billion operating budget.
The House, which took up the budget earlier this session, cut the governor’s increases by a quarter of a billion dollars, and the House GOP said they support those cuts and want more reductions.
But even with those cuts, the budget is still larger than past years, with total including special funds and other revenue at $23 billion over two years.
Funding the Next Four Months of Government Operations
To close the $232 million budget gap this year, and keep the state agencies in operation, the House GOP offered 5 steps.
They would take $46 million from the state’s Rainy Day Fund, and borrow $47 million from the state’s Hurricane Relief Fund until 2013.
To accelerate accounts receivable and delay accounts payable, they suggest delaying $183 million in remaining state tax refunds and holding back the $18 million that the Governor offered the public unions to boost their medical benefits from a 50/50 split to a 60/40 split with the state paying 60 percent of the premiums.
The House GOP also wants to immediately pay local hospitals and doctors a portion – or $32 million – due to them for treating low income individuals on Medicaid, but temporary withhold $25 million.
Funding State Government in the Years Ahead
To fund state government operations in 2012 and 2013 with an estimated budget gap of $1.1 billion, House GOP members have proposals designed to cut spending and boost revenue.
Some suggestions from the House GOP:
Extend state furloughs so that all state non-education related departments take two furlough days a month, saving $115 million;
Agree to the House Democrats’ cuts of $252 million;
Restructure Medicaid services;
Restructure the state hospital system by selling hospitals to mainland corporations and eliminating the state subsidy saving $30 million in fiscal year 2012 and $30 million fiscal year 2013.
Institute a hiring freeze;
As 1,000 state employees (of 45,000) retire per year, do not fill half of those positions for a savings of $70 million each year;
Send another 500 Hawaii prisoners to the mainland for a cost savings of $12 million a year
Ask the University of Hawaii and Department of Education to reduce spending by $35 million each year;
Remove tax exemptions for local businesses such as Hawaiian Airlines and Matson.
To boost revenue, they suggest selling under performing or vacant state buildings and property. For example, Aloha Tower Marketplace and Puahala Homes, low-income housing on School and Lanikila Streets, may be better operated privately. The Campbell Industrial cattle feed lot has been vacant for 20 years, and the former Department of Commerce and Consumer Affairs building on Richards and King Streets has been vacant for a number of years.
The House GOP also wants to:
Delay payment of film tax credits.
Suspend income tax deductions for those who earn $100,000 or more to save the state $45 million.
Sweep excess special fund revenue into operating budget at the rate of $30 million in fiscal year 2012 and other $26 million in fiscal year 2013.
“Decisions are going to be made in the next month that will positively or negatively impact the people of Hawaii. … We want to share these ideas with the people of Hawaii,” said House Minority Floor Leader Kymberly Pine.
Rep. George Fontaine, R-Maui, said there are some difficult choices to be made and the public can be more involved, make their own custom budget and see what is at stake by logging onto the budget web site at hawaiistatebudgetonline.com
Rep. Barbara Marumoto, R-Kahala, said the Democrats had introduced a number tax hike proposals this session, including $600 million in House Bill 799 $600 million alone, were “unbelievable.”
“Look mom, no taxes,” Marumoto said. “We are really proud to present a budget with no tax increases.”
The Senate and House money committees continue to review budget proposals. State agency and social service program directors maintain the cuts will be devastating. However, lawmakers say they are getting feedback from taxpayers that they want government cut and that a tax hike would hurt their families, small businesses and the economy.