Lawmakers get set to tackle widening budget deficit

By Ben Gutierrez - bio | email

HONOLULU (HawaiiNewsNow) - The state Senate Ways and Means Committee is scheduled to tackle the state budget Monday, one day before the Council on Revenues is expected to lower its revenue projections because of the Japan earthquake and tsunami.

The estimated budget shortfall for the next two fiscal years has grown by half a billion dollars since Gov. Neil Abercrombie first unveiled his budget proposal for the next two fiscal years last December. At the time, it was nearly $800 million short. Now, the shortfall is $1.3 billion. Lawmakers are faced with making tough decisions on how to make up that difference.

Honolulu Star-Advertiser political reporter Richard Borreca said the task will be extremely difficult, given that there are no extra funds to tap.

"This is as bad as it gets and the reason why is that the legislature, over the last three years, has taken all of, as they call it, the low-hanging fruit," Borreca said. "All the things they could grab, they grabbed."

The state's revenues were already taking a hit because tourism, the state's biggest industry, hasn't recovered as quickly as expected. And tourism itself is now affected by the disasters in Japan, making the budget hole even deeper.

"The economic consequences will be severe for us in the immediate future," Gov. Abercrombie said on March 14, three days after the earthquake and tsunami hit northeastern Japan. "That obviously is a factor the legislature is going to have to take into account when we try to settle how we're  going to deal with our budgetary necessities."

"The Japanese earthquake and tsunami has so weakened tourism from Japan that it's going to cause a big effect to our own tourism market here," Borreca said. "And when that happens, that's going to show up in tax dollars not being generated. When all that happens, it's going to mean a drop in the state income.

Discussions in the legislature on making up that income have included everything from allowing gambling to medical marijuana dispensaries, as well as cutting programs. But Borreca said ultimately, lawmakers may be forced to consider raising the general excise tax.

"Abercrombie, during the campaign, said he would not touch a tax increase in the general excise tax," Borreca said. "Since then, he's sort of danced around it some and has instead been saying that if the legislature passes it, he would have to interpret that as the will of the people."

Copyright 2011 Hawaii News Now. All rights reserved.