A group of well-placed and well-informed political insiders at the State Capitol have reached a disturbing conclusion about Governor Linda Lingle’s approach to the state’s fiscal problems.
“The bottom line is that they’ve created this artificial crisis, there are other ways to manage it, and if the governor would get off her high horse and stop saying it’s got to be her way or the highway, then there are ways some of these things could be adjusted and accommodated,” one explained.
During a wide-open “not for attribution” discussion earlier this week at the capitol, several legislators with in-depth knowledge of varied program areas shared their frustration and a blunt assessment of the governor’s policies.
They fear the governor is creating an artificial emergency by taking ill-considered actions that will cause, rather than solve, further fiscal problems.
They point first to the administration’s failure to quickly take advantage of federal stimulus money and other anticipated sources of immediate financial relief.
According to data gathered at Recovery.gov, Hawaii will be able to eventually draw on nearly $1.4 billion in federal stimulus grants, with $699 million already made available. Of that amount, the state has drawn only $232 million to date.
“Clearly, if the federal funds are appropriated, and if we’re having a shortfall during a certain period of time, it would be logical to try and fill in with federal funds that we know are allocated to Hawaii to even out those dips,” one said.
“We’re way up the food chain in the dollars allocated, but we’re low on the amount of funds actually drawn and spent,” another observed.
The hearing of the U.S. Senate Appropriations Committee in Honolulu next week, chaired by Hawaii Senator Dan Inouye, is believed to reflect frustration over the state’s tardiness in taking advantage of the federal funds made available so far.
Further, these legislative insiders say, the available federal funds do not appear to have been factored into the state’s financial plans.
A recent presentation by Lingle administration officials to the House Finance and Senate Ways and Means committees “did not cover any of the stimulus money”, instead presented only a general fund plan.
“They may have a financial plan, but it is an incomplete financial plan”, one complained.
Then there are anticipated retirement savings, which have not yet been taken into account by the state. Some sources we could see four times the normal number of retirements, with 4,000 to 4,200 public workers choosing to step down over the next year.
Several factors are said to be at work. There’s frustration over the current uncertainty, stress, and poor working conditions, as well as a desire to “lock in” benefits such as health care now rather than risk potential future cuts in benefits. In addition, threatened furloughs and salary cuts would reduce the incremental advantage of additional years of employment in calculating retirement income.
But there is also a major change in the retirement system that rolls out in October. Under this plan, approved by the legislature several years ago, an estimated 24,000 state and county workers will be eligible to switch back to the higher level of benefits offered by the old contributory retirement plan by buying back prior years of service with a lump-sum payment to the retirement system. They could then retire and receive the higher benefits of the contributory plan, and many are expected to do so. Information packets spelling out the new option are scheduled to be mailed in October, according to the Employees Retirement System newsletter.
There has already been a surge of retirements during the first six months of 2009, and the projected retirement numbers signal huge savings ahead.
“Even if you assume the bulk of those retirements are DOE and UH types that you have to replace, just the disparity in the salaries would end up saving a huge amount of money,” one said.
“When questions were asked during the joint House-Senate briefing, Budget Director Georgina Kawamura had no response,” one participant in our discussion explained. “They said they had not begun to calculate what this level of retirements might mean.”
And that’s not the only thing that hasn’t been thought through, according to these legislators.
“When you talk to people inside the departments, they tell you they have not thought about what it means to close down an entire program, what it means to close down an entire division. They have no clue what do they do with the records and the equipment and all that stuff,” one said.
“They are not thinking beyond the end of their nose, that’s just real clear when you talk to people.
Tomorrow: On the chopping block–The apparent political agenda behind Lingle’s budget moves
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You might want to take a closer look at that recovery data. Hawaii doesn’t lag other similarly-sized (in terms of announced awards) states, at all.
http://www.recovery.gov/?q=content/funding-notification
As for “not for attribution”… something stinks.
I agree with Jim on the “not for attribution” gimmick….from elected public officials, no less. But then, these are the same public officials who could have pushed for a temporary increase in the excise tax during a special session and greatly diminished all the current turmoil and economic pain. But that would taken a thimbleful of courage, which they don’t have…and which they’ve demonstrated again by hiding behind the “not for attribution” scam.
I relish this kind of journalism. And now we have the capability to observe counterpoints and dialogue about the story in “real” time. Awesome.
You got to love the “legislative insiders”. Since they know so much, lets see their numbers and their plan. Don’t hold your breathe because you will see none. You see, the numbers being used by the Governor don’t lie. It is clear, the revenue shortfall is real. The Unions know that and the Legislative Insiders” know it too. You honestly believe that if there were hidden numbers they would have already pointed those numbers out? The Inouye hearing next week will point one very clear point, the Senior Senator and the Legislature will have very little idea how the Stimulus monies work and what will be the actual effects on the generating tax revenues. After all isn’t that what this whole insider charade is all about, finding monies to pay government employees? Watch the Lingle Administration dance circles around the “insiders” and the Senior Senator next week. This will be almost too good to be true!
If I’m not mistaken, if the state accepts the federal stimulus monies, there are conditions of transparency that need to be met, whereas within the state budget office, the system allows for a bait and switch of state-funded programs where money can be moved from one program to the next.
What I’ve been curious about is that I’m surprised by how little we hear about the Disney development in Ko Olina, and considering the kind of development funds that will be needed to implement, what kind of incentives is the state giving to Disney?
I know that Disney required bail out funds when they lost sizable investments last year with the collapse of Lehman Brothers.
The revenue shortfall is real and this may be tied into a plan that she hopes will bring the quickfix needed tourist dollars back to Hawaii.
or it may be simply that the budget office is preparing to follow the budgetary crisis that just slammed California.
The point is that Hawaii should be preparing for further financial crisis, because the economic outlook that was demonstrated at the Statehood Commemoration luncheon was overly optimistic in that it ignored significant potential risks to our financial future.
I have as much faith in her executive program as I do in the legislative at this point, and I think we should all share in concern of what we want for Hawaii’s future when we are currently not holding a full deck.