Monday, March 10, 2008

The Budget Bill Passes Third Reading

House members voted unanimously to pass HB2500, HD1, the Executive Budget bill on third reading. The bill crosses over to the Senate on Wednesday, the same day the Council on Revenues will meet and announce new state revenue projections. Below is the floor speech given the Finance Chair, Rep. Marcus Oshiro. The Committee Report is here.

HB 2500 HD1 – Executive Budget
Floor Speech of Finance Chair - Rep. Marcus Oshiro

Thank you Mr. Speaker. I am standing in support of HB 2500, HD 1, the Executive Budget.

First, let me thank all of the Committee Chairs for their contribution to this measure. Their insight and prioritization of programs were invaluable in crafting this budget.

Thank you also to members of the Finance Committee. They began the careful review of the Governor’s Supplemental Request four months ago in December and have used the Department Budget Briefings as opportunities to analyze and prioritize the thousands of expenditure decisions that make up the Executive Budget.

They have been diligent with their responsibility as members of the Finance Committee and have suffered long hours without any complaint but kept attentive to the hard choices before us and always respectful of differing opinions. Each in their own way has been instrumental in prioritizing expenditures and making reductions. All of you should be proud of the work product that is before us today.

I'd also like to thank the House Finance Staff for all their hard work this session. This budget is a culmination of the efforts of many. Although the budget analysts are the ones most directly involved, there are many issues in the budget that tie back to bills that we crossed a week ago. And none of these efforts could be possible without the backbone of the office – the young men and women you all see in the front office.

They're here with us today in the gallery, and with your permission, Mr. Speaker, I'd like to introduce them.

First the front office – Allison Lee, Mary Ann Kawano, Jeff Yamashiro, Casey Ching, Jo Hamasaki, and Tracy Kubota.

Researchers – Nicolette Rowe, Akio Adams, Erik Abe, Stacey Tagala, and Randall Hiyoto.

Budget Analysts – Leslie Goo, Lauren Endo, Daniel Han, Hunter Gradie, Jonathan Conner, Shaun Kindred, Stan Kubota, Puna Chai, Eric Nouchi and Michael Ng.

Special recognition is due the Vice Chair. She insured that members maintained their health and reminded all of us to avoid too much salt, exercise regularly, and attend to nature when she calls. She kept us moving forward during my absence and no better vice chair could one hope for.

Mr. Speaker, a year ago this Legislature was looking at robust revenue projections, and there was a lot of buzz about large surpluses. At the same time, however, there were several warning signs that the economy was beginning to slow. At this time last year, the Council on Revenues was projecting revenue growth at 6%. However, your committee did not believe that this would last.

As such, last year, we began the difficult task of scaling back state expenditures, while at the same time ensuring that critical programs were provided with responsible, sustainable funding. We ended the 2007 Regular Session with a package of bills and a budget that did not spend everything. We left a healthy ending balance, knowing that it would be needed if revenues did not meet projections. ($200 million by FY 2009 vs. the Governor's$43 million) We were socially progressive but fiscally conservative. But even that was not enough.

Surprisingly, our actions brought a lot of criticism from the Administration. In Op-Eds and Commentaries in local newspapers, Press Releases, and Blogs, several people in the Administration were saying that my cautious attitude about revenues was spreading "doom and gloom" and creating unnecessary panic.

They were asking:

"Why didn't we spend more?"

"Why didn't we give bigger tax cuts?"

"Why can't we have it all?"

Mr. Speaker, politicians often get a bum rap for "not looking ahead". Or not being able to look beyond the next election. The plain and simple truth is the budget we passed last year set us on a solid path to avoid whole-scale, debilitating cuts to state government this year.

Mr. Speaker, I have heard that the committee report attached to this budget offends some people. If any member of this Chamber feels offended I offer my sincere apology. Please know that any criticism therein was directed to the Executive Branch and not this Chamber nor the one across the way.

Furthermore, it was not meant to provoke, but simply set the record straight. Everything written in the committee report comes from published government reports, newspaper articles, written commentaries, press releases, and public speeches.

It is not conjecture.

It is not theory or conclusion.

It is not open to interpretation.

It is simple fact.

I am calling a spade, a spade.

Mr. Speaker . . .

As I mentioned earlier, we ended the 2007 Regular Session with a revenue projection of 6% for FY 2007. When the Council met at the end of May 2007, they revised that projection downward from 6% to 4%, causing an $80 million loss in projected revenue for FY 2007; and in total, a $290 million loss in projected revenue by FY 2009, the end of our budgeting period.

When we got to the end of the fiscal year, June 30, 2007, actual revenue came in even lower than what was projected. Instead of the 4% projected by the Council, revenues came in at 3.4%. This meant that we actually collected about $100 million less than what had been projected when we ended session. That loss would translate out to more than $350 million by FY 2009.

The FY 2008 revenue projection went from 6% at Sine Die last year to 5.7% in September 2007 to the current 4.9%. In total, when you compare the Council's revenue projections that we worked with last year to where we are today, there is a $414 million loss in revenue by the end of FY 2009.

The Council is meeting once again in two days. I ask all of us in this Chamber. What do you think the Council will do? What will be the revised projections? What impact will it have upon the budget and Financial Plan?

This is not the time to say "I told you so." It is also not the time to point fingers at one another. It is time to prepare ourselves for a slowing economy – make due with what we have - and live within our means. It is time to face reality.

We must hope for the best, but prepare for the worst.

This operating budget totals $5.3 billion in general funds and $10.7 billion in all means of financing. Mr. Speaker, this budget cuts state government by $67million – approximately 1.27 percent.

Mr. Speaker the budget before you cuts state government. People may ask, "What will the impacts of these cuts be?

Unfortunately, I do not know the particulars. I wish I did. But, I do know that someone’s ox will be gored. I asked the Governor and her Administration to work with us and I was told that they, "could not comply" with our request for information.

In the coming days and weeks I'm sure that we'll see exactly what the impacts of these cuts are going to be. I continue to hope that we can all work together on this. It is what the public demands and expects of each and every one of us.

Mr. Speaker, this is an honest budget. It doesn't create false expectations, or make empty promises. Moreover, I expect my counterpart in the Senate to conduct her own independent review and examination of the budget. I also expect that she will apply the Council of Revenues March Projections to the financial plan. In other words, I do not expect a rubber stamp approval by the Senate.

Mr. Speaker, there will be tough economic times ahead and equally tough decisions to be made. Therefore, let us put aside false expectations and personal legacies and brace ourselves for the inevitable economic downturn and its effects. With courage and compassion, being cordial and honest, let us pledge ourselves to work together to insure that core government services are maintained for the heath, safety, and welfare of all our people.

Toward this end, I humbly ask for the unanimous support of the members. THANK YOU.

No comments: