The budget Gov. Neil Abercrombie unveiled on Monday needs further paring over the coming weeks because it does not yet show enough austerity, given the fragile state of Hawaii’s economy.
But the good news, if one can call it that, is the fact that the Abercrombie administration is at least engaging the public and the Legislature on ways to maintain core government services without damaging the fledgling recovery.
Abercrombie’s budget staff managed to finish the budget draft early enough to get in some public debate before a key legislative deadline in March. That’s good — and the governor will need every bit of time remaining to win over lawmakers.
Part of the job over the coming weeks will be persuading legislators — and the public — that widening the fiscal gap is the right course. We’re not convinced. That shortfall, extending through the next biennium, had been estimated at $844 million; however, Abercrombie believes he needs to find $728.6 million more through fiscal year 2013 to restore "a functioning government."
Some of the restored line-items certainly are givens. Among them: The state is bound to provide services to Micronesian migrants, make a deferred payment into the Employees’ Retirement System and honor an agreement to cover 60 percent of public employees’ health care premiums.
But inclusion of other programs is questionable. One small example of a failure in frugality: The governor has not yet made the case that the Hawaii Film Office is essential now, while money is tight. And while he’s still hoping to cut expenditures on Medicare Part B reimbursements for retired public workers, state lawyers warn that this could spark a legal challenge. Finding other ways to cut becomes critical.
On the taxation side, Abercrombie will need to push hard to overcome lawmakers’ distaste for some of his ideas. A soda tax that could be helpful in generating revenue without crippling businesses has already run into a brick wall of opposition from the beverage industry lobby. And he seems to be banking on some revenue producers — such as a pension tax — that lawmakers already seem inclined to water down.
What’s also lacking in this budget so far is any attempt to save money through consolidation and other operational efficiencies. Perhaps it’s too soon for a significant move toward reorganization, but the governor needs to start to outline his vision. One glimmer of hope is the allotment for a chief information officer who could oversee updates to state data systems that ultimately can make things more efficient.
On the capital improvement front, Abercrombie’s plan for bond financing of infrastructure projects is defensible, especially as that investment is front-loaded with more projects starting in the first year of the biennium. A boost to the still-languishing construction industry would be welcome, and the administration should ensure that permitting here would be streamlined.
Also welcome: Abercrombie’s underscoring of his opposition to a general excise tax increase. House Speaker Calvin Say, who agrees on that score, is rightly concerned that Abercrombie’s calculations assume a 5 percent labor savings, which may not be enough to make things all pencil out in the end. Getting labor talks under way as soon as possible would be a prudent move.
The governor seemed a little too eager to denigrate the bookkeeping "gimmicks" of his GOP predecessor, Linda Lingle. State Rep. Gene Ward, House minority leader took some umbrage at that yesterday, and he has a point.
"The Abercrombie administration is not making hard choices and continues to blame an administration that fared very well when compared to the other states on the mainland during the global economic crisis," Ward said.
Let’s hope Abercrombie has more success than Lingle did where the rubber really meets the road — in wrangling concessions from the unions. Once he’s brokered his first deal, then maybe he can exercise his bragging rights.