Fears of a $1B state shortfall lead to spending cuts

Facing a projected deficit of nearly $1 billion by July 2010, Gov. Linda Lingle has put the clamps on state spending, according to media reports. The projections of a growing deficit could result in layoffs of state workers, according to State Rep. Marcus Oshiro, House Finance Committee chairman.

"Given the magnitude of this level of revenue reduction, immediate action must be taken to control and reduce government expenditures, starting with (fiscal year 2009)," Lingle wrote in an Aug. 29 executive memo. "No new programs should be contemplated because they are not sustainable in the future. Purchases of new equipment, software, computers and vehicles are strongly discouraged. Travel is limited to essential purposes where teleconferences are not practical."

"The general fund gap is projected to be over $900 million," Georgina Kawamura, state budget director, wrote in a memo to department directors. "Under these extraordinary financial circumstances, immediate and substantial actions are needed to balance the general fund."

Except for emergencies or court-mandated decrees, hiring to fill vacancies is frozen and all state contracts of more than $10,000 and all out-of-state travel must now be approved by the governor's office, Lingle told directors. Kawamura ordered the directors to look at all budget increases since 2004 and to identify programs with lower priority for possible reduction or elimination.

Finance Chair Oshiro said even with these spending cuts the state will still be in the red and  "there are going to have to be cuts. There are no ifs, ands or buts about it. There might be some reduction in work force. When I say reduction in force, I mean warm bodies. To address this kind of a shortfall, it will be very difficult to not cut programs and for it to have an impact on the work force."

Revenue projections in recent months show an estimated loss of $2.8 billion in revenue previously expected. Administration sources say there must be serious program reviews but that it is too early to say whether and which state programs will be cut.