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Balance the state budget and do it by session’s end

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Here’s hoping the governor and all Hawaii’s lawmakers get a lot of rest over this Presidents Day weekend. They’re going to need it.

Gov. Neil Abercrombie and his finance staff have promised this week to deliver the long-awaited budget, in which he must close an $844 million deficit extending through the next biennium. Having this spending plan in hand will be essential in the coming weeks if lawmakers are to reasonably evaluate a mix of proposals to raise revenue and cut government costs.

Judging by the drama at Thursday’s town hall meeting at Pearl Ridge Elementary School, the discussion may get pretty contentious. Some of the residents who turned out vented their frustration with the revenue boosts they’ve heard of so far, and who can blame them? It’s hard to be indulgent about further drains on the household accounts when it’s unknown how much frugality, if any, the administration is applying in its own money management.

Now that the curtain is about to go up on the budget, here’s a wish list for Gov. Abercrombie:

» Take some needed action on the promise to "restructure" state agencies, creating a more economical system. Rather than short-term trims aimed only at patching the state through its current fiscal predicament, fixes should be permanent, ensuring that Hawaii retains a government it can more easily afford, even when the economy, and tax coffers, rebound.

» Abercrombie should continue to resist increases in the general excise tax, as he pledged to do during the campaign. Unlike a sales tax such as those that other states use to raise revenue, the GET applies at each transaction as merchandise moves from its origins through final sale. It raises the cost of goods and services, already in flux due to the post-recession inflation rate of 1.7 percent. The GET disproportionately affects poorer citizens, as well.

» Revenue boosts are likely to be needed, but they should be of a more limited scope, such as the proposed repeal of the deduction of withheld state taxes, currently available to those who itemize their state tax returns. A further example: The taxing of pensions Abercrombie proposed should remain on the table, as long as it’s temporary and only affects the pension income above a set threshold.

» The governor needs to stick to his guns and insist on his stated goal of a 5 percent reduction in labor costs, once he begins negotiations with public employee unions. Further, he should nail down a deal to stop underwriting Medicare Part B costs for retirees for future state hires, given the attorney general’s opinion that curbing benefits for current employees probably would face a legal challenge.

Abercrombie has always been a supporter of public employees — the polar opposite of Wisconsin’s governor who seems determined to bust unions there. That being said, it was good to see him delivering a message to unions at the Pearl Ridge event, heatedly making the case that "we all have to give a little." Abercrombie is absolutely right about that, and taxpayers certainly hope he retains that resolve when he joins labor leaders around the negotiations table.

The governor is bound by the state Constitution to keep the state budget in the black, so he shoulders most of the burden of the current fiscal challenge. But he needs his partners in the House and Senate, too, who should have grasped by now that passing a balanced budget is their top priority this year, one that avoids anything that would cripple the weakly recovering economy.

Chatter in the state Capitol halls indicate some lawmakers may be tempted to postpone the toughest budgetary decisions until a special session, with decisions forged in the interim and when the looming start of a new fiscal year makes those decisions more urgent and thus, more politically palatable.

Anyone contemplating this should just forget about it. This is a job that should be achievable within the 60-day window of the session. Lawmakers ran for office fully aware of the mission, difficult as it is, and now it’s time to deliver for the voters, not duck.

 

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