Categorized | Education, Government, News

State Budget and Finance director reacts to Senator Hooser’s comments

MEDIA RELEASE

For more than a year-and-a-half, the facts about the state’s economic and fiscal challenges have been clearly laid out, but unfortunately, some refuse to accept the reality that until the State’s revenues recover, we simply cannot continue to pay for all the existing government programs.

In a recent opinion-editorial, Senate Majority Leader Gary Hooser questions the Administration’s urgency to balance the budget, including the need for layoffs, and says that addressing the budget shortfall “takes time” and “long-term planning.”

Hooser seems oblivious to the rapid and steep rate in which the State’s unprecedented budget shortfall developed as a result of the economic impact Hawai‘i experienced when the global and national recession hit.

From March 2008 through August 27, 2009, the Council on Revenues, which forecasts the State’s tax revenues, projected that Hawai‘i will have nearly $3 billion less revenue than anticipated through June 30, 2011. This is nearly one-third of the State’s total projected general fund budget for the next two years – funds that we cannot spend because we don’t have them.

Through various prudent spending restrictions, the Administration has reduced spending by $2 billion. However, we still face a $496 million shortfall in the next nine months and an additional $529 million from July 1, 2010 to June 30, 2011. That’s a total of $1.024 billion less money we will have in the next 21 months.

Our fiscal condition will take time to recover. Because of the huge revenue losses between fiscal years 2009 and 2011, it will take until fiscal year 2012 for our revenues to return to pre-recession levels.

Because of this, it cannot be business as usual, and we cannot follow Hooser’s strategy of kicking the can down the road and hoping things will get better.

For Hooser to say that there is no need for urgency and to call the Administration’s actions to balance the growing budget shortfall “fear-based decision-making,” shows how out of touch he is with reality.

Like all of Hawai‘i’s families and businesses who are making tough decisions to tighten their belts in the face of reduced income, the Administration is focused on reality-based decision-making versus Hooser’s wishful thinking.

Hooser prefers that we hold hearings and community discussions to debate the type and size of government we should have. Lawmakers can hold such hearings during the next legislative session, or even schedule them now while the Legislature is on its break. Frankly, the Legislature should have held such discussions three or four years ago, when the State had money to invest in our long-term future.

While Hooser is busy debating options, the Administration is facing up to our fiscal responsibility and obligation to the people of Hawai‘i by taking immediate steps to address the current financial crisis. Many of the decisions that are being made are not ones that we want to make, but we are doing what needs to done in order to ensure the State government does not run out of money, which will happen if we wait as Hooser suggests.

Hooser questions the need for layoffs, but does not acknowledge the fact that labor costs account for 60 percent of the state’s budget. Private businesses reduce labor expenses as their first step in controlling costs. The Administration exhausted other sources to realize $2 billion in spending reductions before turning to labor savings in order to minimize the impact to the public as well as to state employees and their families.

The most disappointing part about Hooser’s criticisms is that he fails to offer any solutions to balancing the budget. He has not proposed one fee or tax he would increase in order to generate more revenue. Nor has he proposed one program or service that he would cut.

It’s one thing for Hooser to disagree with the Administration’s approach to addressing the budget shortfall – we realize our decisions cannot please everyone – but to not offer any solutions or be willing to make tough decisions in this time of crisis shows a lack of leadership.

Governor Lingle, Lt. Governor Aiona and our entire cabinet are continuing to work with many in our community who understand the urgency of the current fiscal realities and have stepped forward to offer constructive solutions to help us recover from this financial crisis so we can emerge stronger.

Georgina Kawamura
Director
Department of Budget and Finance

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