STATE DEPARTMENTS FACED WITH ADDITIONAL 2% BUDGET RESTRICTIONS

Governor Linda Lingle informed all state department heads today of the immediate need to implement a further 2 percent reduction on discretionary spending for the remainder of FY09, in light of an anticipated reduction in the revenue forecast, legislative actions taken during the 2009 session and the need to meet the balanced budget requirement of the Hawai’i State Constitution.

In a statement released today Governor Linda Lingle said, “Due to the Legislature’s unwillingness to pursue alternative, fair and reasonable solutions for closing the budget shortfall during these unprecedented economic times, we are forced to apply additional spending restrictions across all state departments at this time, on top of the prudent restrictions that were already implemented over the past year.”

When the Council on Revenues began lowering its forecasts last year, the Lingle-Aiona Administration took steps to reduce expenditures, which included a 4 percent restriction on discretionary spending and a hiring freeze implemented in June 2008, followed by an additional 2 percent restriction on discretionary spending applied in January 2009.

The Administration also recommended additional steps to close the projected shortfall when the Council on Revenues lowered its revenue forecast for FY09 again in March 2009. These included the use of federal stimulus money from the State Fiscal Stabilization Fund (SFSF) to restore cuts to the Department of Education budget and the use of reserve funds from the Emergency and Budget Reserve Fund (EBRF), otherwise known as the Rainy Day Fund.

The Legislature did not authorize the use of SFSF funds for FY09, which ends June 30, 2009, and limited the amount of funds that could be used from the EBRF.

Lingle said there is a further concern that the Council on Revenues may lower its revenue projections for FY09 again on May 28, 2009.

The latest spending restriction affects the Executive Branch, including the Governor and Lieutenant Governor’s offices, as well as the Department of Education, the University of Hawai’i and 15 other state departments and agencies. The total restrictions amount to $36.3 million. Combined, the spending restrictions for the current fiscal year total $86.2 million.

(Posted by Wendy OSHER © 2009)