I attended the Governor's meeting today, held in the State Capitol Auditorium, on the state's challenge to balance the budget. Simply put, Georgina Kawamura, the state's budget director, estimates that the state will face a $155.4 million shortfall by the end of this fiscal year. This is, frankly, illegal. The state cannot carry a deficit into the next fiscal year, by law. Therefore, the administration needs to make major cuts in order to balance the budget.
The Governor explained that the state is not like the federal government which is currently carrying a national debt of over $10 trillion. (Yes, that's trillion with a T.) The difference is that the federal government can print money and the state cannot.
While $155.4 million seems like a lot of money, that figure may grow further still. The legislature has asked the Council on Revenues to review their 1% growth projection for fiscal year 09 as this figure does not take into account the national economic meltdown of the past month. The COR is planning a meeting next week, yet it is unclear whether they will accommodate the legislature's request at that meeting.
Speaker Say anticipates that there may be negative growth for the year, which, if true, could mean that the shortfall will increase by about $50 million for each percentage point.
The Governor has asked her departments to calculate 10%, 15% and 20% budget cuts from the general fund, in addition to looking at tapping into special funds. She said that she does not anticipate clsoing the gap without using money from the state's various special funds.