Lingle’s Fiscal Planning Failure

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Wednesday - February 18, 2009

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As chairman of the Finance Committee of the Hawaii State House of Representatives, Wahiawa Democrat Marcus Oshiro has seen rough times before. He chaired Finance when the terrorist attack of Sept. 11 sent the state’s economy spiraling downward.

“But this is different,” he says. “We’re in unchartered waters.”

And the seas are rough. Over the past six months, state government has seen a dramatic drop in tax revenues - and there’s no end in sight. On Jan. 9, the council predicted that revenues would drop at a 3 percent rate - the equivalent of $125 million less in revenues than was budgeted for the remainder of the fiscal year.

The council will issue another report on March 16. Announcements of business closings, layoffs, lower visitor numbers, lower hotel occupancy rates come every day - indicating that the projection of tax receipts will drop still.

According to Oshiro, Gov. Linda Lingle has offered “no Plan B” based on the new revenue projections: “The governor’s told us that she will offer no financial plan until March 16 when the council issues a new report.

“But we need to move the budget and the individual bills. We can’t do the budget alone; it has to be done in the bills. We have to have them ready for crossover to the Senate on March 16. I’d like to have them by the 12th.”

Oshiro and the rest of the Democrats who control both House and Senate express disappointment (or more accurately, level blame) at Lingle for her failure to offer a fiscal plan.

“We all know it’s going down, that the economic downturn is going to be deeper and more extreme,” he says. “But we don’t want to alarm and incite people any more than they already are.

“It will be our policy to protect warm bodies, but everything is on the table. We recently met with the labor unions. All of the public-sector unions are in collective bargaining: the University of Hawaii Professional Assembly, the Hawaii State Teachers Association, the Hawaii Government Employee Association - all of them. Reductions in force, furloughs for state workers, reduction in benefits, gambling, raising taxes, borrowing from special funds - everything’s on the table.”

Oshiro expressed shock last November when Lingle chose to be the only governor (save Barack Obama stalwart Bill Richardson of New Mexico) not to meet with the then president-elect in Philadelphia: “I offered to pay for her round-trip ticket and buy her a box of pineapples to deliver to the president.”

While the majority of the nation’s governors have lined up in support of Obama’s recently passed economic-stimulus package, Lingle noted her discomfort with aspects of the plan rather than parting company with the Republican naysayers in the United States Senate.

“On the issue of budget, the governor’s making herself irrelevant,” says Oshiro. “She can continue to kick the can all she wants - to March 16 or, taken to the extreme, to May or the end of the fiscal year. But we’ve got to do this. And I’ll lead. We take the first pass at the budget and its priorities and send it to the Senate.”

Some have speculated that Lingle’s failure to lead on the budget has everything to do with the public employee unions. Says one prominent House member: “She’s not opening up because the public employee unions are at impasse. Unions face either no raises, RIFs (reduction in force) or a cut in benefits. Who wants to be the first with those messages?”

No one. But on raising taxes, Oshiro is taking a lesson from Obama. “I’m proposing that we raise the state income tax rate on the wealthiest - to 12 percent from 11.”