Governor plans more job cuts, tax grab

Gov. Linda Lingle said on Dec. 21 she plans to balance the state’s budget over the next two years by cutting $1.2 billion in expenses, mostly through the elimination of 700 state jobs in addition to about 1,200 job cuts were previously announced. Most cuts would be in the departments of health, human services, public safety, accounting and general services and agriculture. However, Lingle said a total of about 800 jobs are already vacant.

Lingle’s supplemental budget presented to the Legislature included plans to cut $522 million from the current budget by the June 30 end of the fiscal year and another $509 million from the 2010-11 budget. Layoffs, furloughs and spending restrictions will save about $450 million this year. Lingle’s proposal includes:

• Taking the transient accommodations tax revenue from the counties “until the state regains its financial footing.” That will take about $99 million from the counties, starting July 1, 2011.
• Delaying payment of $275 million in anticipated tax refunds in 2010, but no longer than 90 days.
• Taxing insurance commissions the same way as other professional commissions, resulting in a $20.6 million revenue gain.
• Making businesses pay general excise taxes on the 20th of the month, as well as fuel and TAT taxes, for a $36.3 million gain. Part of this effort is assuring that businesses remit their GET taxes to the state.
• Discontinuing Medicare Part B reimbursements for spouses of state government retirees, and life insurance premiums for government employees and retirees, saving $12.5 million.

Meanwhile, the University of Hawaii will impose a 6.6 percent cut on most professors’ salaries starting Jan. 1. In a letter to faculty members on Monday, Dec. 28, President M.R.C. Greenwood said UH has not been able to negotiate a new labor contract with the University of Hawaii Professional Assembly, which represents 3,200 UH faculty members, for the past 15 months.

The 6.6 percent pay cut will apply to faculty members hired before Dec. 31, and will be applied after any needed adjustment to a faculty member’s base pay. Any faculty hired after Jan. 1 will see a 5 percent decrease in base salary. Faculty members who retire before June 30, 2010, will not be subject to the pay cuts. Base salaries will be restored on July 1, 2011, according to Greenwood’s letter.

Hawaii’s Council on Revenues, a panel of Hawaii economists, on Dec. 17 predicted tax revenues for the current fiscal year that ends June 30 would fall 2.5 percent from a year ago. That’s down from a 1.5 percent drop forecast in August and means the state’s budget deficit will grow by about $40 million through June 2011.The state had previously forecast a $1 billion deficit.

Governor Linda Lingle and the Legislature will begin drafting a new budget beginning in January. Lingle and lawmakers have struggled to find new revenue sources and cut funding for programs and government employees. Hawaii’s general fund revenues through November were down 6.5 percent. Year to date, the general fund was down from $1.8 billion last year to $1.7 billion. The general fund totaled $356.6 million for November.