The House of Representatives today approved a balanced budget measure that calls for "broad and deep" spending cuts across virtually all State departments and programs, including education and human services, according to House Majority Leader Marcus Oshiro.

House Bill 1800, House Draft 1, adjusts and reprioritizes State spending based on a $315 million two-year revenue decline resulting largely from the September 11 terrorist attacks.

Rep. Dwight Takamine, chair of the House Finance Committee, said the budget is "grounded in reality" and places its highest priorities on 1) protecting the most vulnerable and fragile members of society from extreme hardship, hunger and homelessness, 2) educational services for elementary, secondary, and high school students, and 3) maintaining the long-term vision and potential of the University of Hawaii system.

The measure passed final reading in the House with strong bipartisan support. Two Democrats and eight Republicans opposed the measure. HB 1800 now crosses over to the State Senate for approval.

Oshiro said he was somewhat disappointed at opponents' refusal to accept the current realities and the sound fiscal judgment demonstrated by the committee in producing the bill.

"They seem to conveniently ignore the fact that this budget must realistically deal with a temporary roadblock that has been thrown up before us," he said. "Not one opponent of the budget offered any realistic and concrete alternatives, but instead relied solely upon campaign clichés and sound bites."

Oshiro said the Legislature for the past several years has been implementing structural, tax and other reforms to streamline State government, make it more efficient, and less costly.

"We've cut hundreds of millions of dollars in personal income taxes, cut general excise tax pyramiding on business subleases and intermediary services, provided emergency business tax relief in Special Session, created the best high tech incentive package in the nation, reformed the Public Employees Health Fund, and authorized full privatization of government services -- all within the past three years," he said.

"This year, in spite of 9-11, we've passed bills to totally reform governance in public education through decentralization, abolished most of the deputy level positions in State government, and authorized even more tax relief to businesses and individuals to keep more money circulating in our economy."

The budget passed today will not alter the Legislature's mission, nor diminish any of the initiatives approved in prior years, Oshiro said. "But the fact is we have to deal with the aftermath of September 11 now. We can't ignore it and hope it goes away. The truth is, this is a tragic, serious, but temporary situation. If things keep improving, and I believe they will, our economy will be back on track and we will have a more efficient and sustainable State government."

HB 1800, HD 1, reduces spending by more than $143 million for the current biennium. It incorporates spending cuts of 2 percent by the Administration and an additional 3 percent imposed by the Legislature.

Services that lost funding or had funding cut in the budget included:

Education

• Eliminated Computer Education Program (-$3.6 million)
• Eliminated Summer School (-$1.1 million)
• Reduced A+ After School Program (-$3.45 million)
• Reduced English as a Second Language (-$3.6 million)
• Reduced Hawaiian Studies and Language Immersion (-$1.9 million)
• Reduced Gifted and Talented Program (-$1.7 million)
• Eliminated Principal/Vice Principal Incentive Program (-$200,000)

Health, Human Services

• Reduced Assistance to the Aged, Blind, and Disabled (-$1.7 million)
• Reduced Financial Assistance to Temporarily Disabled (-$1 million)
• Reduced Developmental Disabilities Home & Community-based Medicaid Waiver Program (-$3 million)

Public Safety

• Reduced County Career Criminal & Victim Assistance Program (-$46,369)
• Eliminated Lifeguard Services for Kaena Pt., Hapuna State Park (-$403,000)

Takamine said the Finance Committee also was seriously concerned over the erosion in consumer confidence that could result from such massive cuts in State services. Lacking any other funding options, he said the committee recommended transfer of $100 million from the Hawaii Hurricane Relief Fund to restore the most essential of those services.

The transferred amount was replaced with a general obligation bond authorization of $100 million, preserving the integrity of the fund should another disaster strike, he said.

The budget also includes $340 million in new general obligation bonds for capital improvements, substantially less than the approximately $900 million requested by the Administration to help stimulate the economy through construction projects. Most of the money is targeted for the repair and maintenance needs of our schools and for the University of Hawaii, Oshiro said.

However, Takamine said that when the Legislature's actions over the past two years are taken together, the amount of money available for capital improvements is actually $2 billion and avoids the high level of future debt payments that would be necessary under the Administration's request.

He said the $340 million added to bond appropriations approved in the 2001 Session and the Third Emergency Special Session of 2001, combined with previous appropriations using revenue bonds, special funds and federal funds, "we arrive at a total capital investment amount of $2 billion."

While HB 1800, HD 1 does show an increase of about 1,450 positions, Takamine said over 1,400 of those positions are for the Department of Education, and virtually all of them are tied to the Felix Consent Decree for Special Education, a court-ordered mandate that the State must comply with. The rest of the positions are for the University of Hawaii, security for Honolulu International Airport, and Child Welfare Services.

Takamine and others also de-bunked the claim that attrition, or decimating the State workforce by haphazardly wiping out vacant positions, would produce enough savings to avoid using the Hurricane Fund and avoid actual layoffs.

"I challenge both Majority and Minority members to identify what specific positions to eliminate using attrition," Oshiro said.

"In my judgment, the Finance Committee did a brilliant job under very difficult circumstances," Oshiro said. "This fiscally responsible and realistic budget will enable the State to provide the essential services for the health and safety of our community, and keep us in a viable position when our economy improves."

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