State-funded agencies face substantial funding cuts

On Wednesday, June 24, Governor Linda Lingle announces across-the-board cuts in state spending from the general fund by 4 percent. The governor described the decision in a memo to department heads as "cautionary and restrictive to ensure that the state lives within its means." The restrictions, which total $33 million for the fiscal year that starts in July, come on top of the $44 million the state Legislature cut from the governor's supplemental budget request last session.

Many nonprofits received that news along with a letter from the state Department of Human Services announcing 12 percent across-the-board cuts to federal welfare grants given to agencies that help low-income families and individuals. Lillian Koller, the department's director, wrote "While a 12 percent funding cut will present challenges for many of our community partners, it is certainly preferable to the alternative of eliminating funding altogether, as we had feared."

The cuts are in response to a decrease in the amount of federal welfare money the department can spend next fiscal year, which begins Tuesday. State lawmakers restricted the department to spending $22 million less than it wanted to keep a substantial reserve fund.

Last month, the state Council on Revenues reduced its revenue forecast for the fiscal year that ends this month to 3.3 percent, down from 3.9 percent in March. The council lowered the forecast for next fiscal year to 2 percent, down from 4.1 percent. The downgraded forecast, according to recent estimates from the state House Finance Committee, means $14.4 million less in state money this fiscal year and $137 million less for next fiscal year.

Lingle warned department heads that the "cautionary stance" will continue into the next budget cycle along with other fiscal measures to safeguard the state's general fund. Unlike the federal government, states are not allowed to run up budget deficits.