If the family budget looked like the state’s budget, this would not be the time to panic — but it also is not the time to put in a pool or order up that case of filet mignon.
Despite getting kicked in the knees by the Council on Revenues (COR) last week, officials are still dealing with a budget surplus.
The COR chopped the tax revenue estimate from 5.5 percent growth to 3.5 percent. That means the state would take in about $110 million less than previously estimated.
The state is running about $270 million in the black, so it is not time to sell the family dog.
Kalbert Young, state budget director, last week reacted to the COR bad news by saying it was "pessimistic."
"Obviously, this current forecast is going to be the basis for what that budget is going to look like," Young said in an interview with Star-Advertiser reporter B.J. Reyes "Considering that it’s going to be up to the next administration to formulate a budget for the biennium, it’s going to put some pressures in terms of what that budget is going to look like."
Much of the state’s budget is fixed and the bills must be paid. For instance there is no option for trimming back salaries; everyone has to get paid.
During the recent Democratic primary election, two former Hawaii governors said they were concerned about the salaries going to unionized state workers.
Former Gov. George Ariyoshi worried that outgoing Gov. Neil Abercrombie was rushing to sign collective bargaining agreements in an effort to curry favor with the public employee unions.
"The public employee agreements, they were reached in a hurry because, in my judgment, they wanted to make some deals with the public employee unions, and I am not sure they were properly negotiated to benefit the state," Ariyoshi told me in an interview.
Abercrombie’s biggest labor ally, the University of Hawaii Professional Assembly, won new 4 percent across-the-board salary increases to start next year. It was an unusual deal because agreement was reached even before the old contract expired.
While Abercrombie had a difficult time with the teachers and nurses unions, workers have all seen raises.
"Neil gave the unions virtually everything they wanted with no concession for reforms in return," former Gov. Ben Cayetano said in an email Monday.
During his two terms leading the state, Cayetano insisted that union pay increases be coupled with some sort of extra benefit to the state, such as increased work hours. But his own relationship with the public worker unions was rocky as both university professors and teachers went on strike during his last term.
Hawaii’s next governor and the new set of legislative leaders will have to figure out how to pay for those higher pay raises.
At the same time they will deal with a new economic worry: We are not getting the expected bang for our construction bucks.
Kurt Kawafuchi, chairman of the Council on Revenues, said part of the reason for downgrading the state is that there has been a smaller-than-expected impact from new construction projects.
"We just haven’t seen as much bite, or juice, that’s being added by all of the pending construction," Kawafuchi said Friday. "We do see some juice, but maybe not as strong as we had previously estimated."
Meanwhile, costs are rising. Legislators were recently told that the bids for Kapiolani Community College’s new culinary arts building, which was budgeted at not more than $22 million, came in at $34 million.
So for Hawaii, the budget forecast is this: Cancel the pool and start learning to love hamburger, not steak.
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Richard Borreca writes on politics on Sundays, Tuesdays and Fridays. Reach him at rborreca@staradvertiser.com.