Rep. Marcus Oshiro on the budget

Making of the 2011 State Budget

House and Senate conferees today voted to agree on the conference draft of the state budget bill. HB 200 appropriates funds for the operating and capital improvement budget of the Executive Branch for fiscal years 2011-2012 and 2012-2013. The measure will now go to the House and Senate for full floor votes. Representative Marcus Oshiro and Senator David Ige give final remarks about the state budget in the video above.

No room for basket weaving

I found a great read from The Chronicle of Higher Education about the different approaches college officials and policy makers nationwide are proposing this year to deal with large budget cuts in higher education. The article, Colleges Press New Ideas as They Brace for Bumpy State-Budget Sessions, mentions several universities that are now pitching to lawmakers ideas that would normally be politically unpopular during better financial times.

They include:

-Merging institutions
-Replacing tenure with 4-year contracts
-Making a public research university private
-Less state regulation
-Capping enrollment
-Cutting state-aid programs (scholarships)
-Reducing the need for faculty by reducing the number of general-education credits required
-Increasing cigarette taxes and using revenue for higher education – revenue discussion

However, some state lawmakers are pushing for more accountability by proposing cuts to underenrolled and redundant programs and basing how much appropriation a school receives on the number of graduating students rather than the number of students enrolled. Rep. Phyllis Gutierrez Kenney of Washington summed it up with this quote from the article, "There's no room for basket weaving anymore, anywhere."

Here on the islands, the University of Hawaii, in October, proposed a hiring freeze, electricity conservation and spending cuts to address the projected 4% revenue shortfall. It would be a savings of $30.6 million.

Now that the 2009 Legislative Session is around the corner, the Committee on Finance will be holding an informational briefing with UH officials to discuss their financial plan given the most recent revenue projection, which will be determined by the Council on Revenue this Friday. The info briefing will be on Thursday, January 15, 2009 from 9 a.m. to 12 p.m. in conference room 308.

Don't be an ostrich for Halloween

At least not when it comes to our state's fiscal condition.

The State Council on Revenues did a rare thing by revising state tax revenue projections for the current fiscal year outside its normal reporting period.

They did so because the House Speaker and Senate President requested the revision given the dramatic and global economic downturn of the past few months. In addition, the state administration is in the process of putting together their state budget plan which they will present to the legislature in December. Better for everyone to be working with the most current projection possible.

The Honolulu Advertiser story is here. The Honolulu Star-Bulletin report is here.

In a nutshell, here are the COR's projections for this fiscal year and the next bi-ennium, and the new ending balances as a result. The old projection is in parentheses. Thank you to House Finance for the information:

FY09 = -0.5% growth (+1%)
FY10 = +3.5% growth (+4.0%)
FY11 = +4.5% growth (+3.9%)

FY09 = -$225.0 million
FY10 = -$728.6 million
FY11 = -$1,103.3 million (or -$1.1 billion)

By fiscal year 2011, the projection is a negative $1.1 billion. The Governor will have to trim this amount from the state budget and financial plan prior to submitting the plan to the legislature in December.

The COR cautioned that the -0.5% may be further revised downward.

New Revenue Projection Expected Wednesday

Forget Halloween. This may be the scariest news of the week. The State Council on Revenues will meet on Wednesday, October 29th at 2:00 p.m. On the agenda are two forecasts:

Total Personal Income Forecast
General Fund Revenue Forecast

The current general fund revenue forecast for this year, fiscal year 2009, is at 1% growth. At this projection, the state budget director said last week that the state faces a $155.4 million shortfall.

Should the Council lower the revenue projection, that will mean an additional $50 million for each percentage point, up or down.

Contradictions from the Lingle administration

"We want to reassure the public that there will be no budget shortfall, and public services will not be cut or delayed, as has been claimed." Robert Piper, Deputy director, Budget & Finance on 7/20 Kauai Garden Island and 7/22 Honolulu Advertiser.

"The state Department of Budget and Finance told the Department of Education that it would not release $110 million out of $235 million appropriated by lawmakers from the general fund in the past two legislative sessions. The restrictions could delay construction work for at least eight months in about 55 of 96 public schools that are first in line for repairs." Honolulu Star-Bulletin, 7/22.

"They ignore the fact that with the state collecting $150 million more in revenues in fiscal 2007 than 2006, there is ample money to keep state services at the same level, if not increase them." Ted Liu, DBEDT Director, Honolulu Star-Bulletin, 7/22.

"On July 1, 2007, departments will receive their respective budget allocations for the first quarter only. Full-year allocations are targeted to be available by September 15, 2007....Please be alerted that budget restrictions may be imposed in September should the current revenue condition continue." Governor Linda Lingle, Exec. Memorandum No. 07-01, 6/27.

National Taxpayers Union Praises House Bill 122

The Advertiser reported today that the National Taxpayers Union (NTU) has praised Hawaii lawmakers for passing a new law promoting accountable government. House Bill 122, introduced by Finance Chair, Rep. Marcus Oshiro, requires the state to create a searchable web page that discloses all entities and organizations that receive more than $25,000 in state funds. The bill became law without the Governor's signature. Link to story here.

The requirement is modeled after federal legislation, co-sponsored by Senators Tom Coburn and Barack Obama, which instructs the U.S. Office of Management and Budget to provide online information on federal grants and contract disbursements. Hawaii became the 5th state last week to open up state accounting records, joining Kansas, Minnesota, Oklahoma and Texas. The NTU had one recommendation for change. Given that the federal legislation dollar level is $25,000, they suggested that Hawaii may want to consider lowering the threshold next year.