UPDATED 6/23/11 2:15 p.m.

Gov. Neil Abercrombie is asking all state departments to cut their budgets by 5 percent as the administration moves ahead with implementing $50 million in savings for the budget year starting July 1.

As part of the operating budget legislators approved in May, two separate lump-sum savings of $50 million were housed in the Department of Budget and Finance for fiscal 2012 and 2013.

At the time, lawmakers said they were giving the Abercrombie administration the flexibility to come up with those cuts to “reprioritize state government.”

In a June 16 memo to all department heads, Abercrombie said that he wants to “avoid imposing standard across-the-board ‘horizontal’ budget adjustments that would further hobble hard hit departmental operations.”

Instead, the governor is asking departments to make “honest and discerning assessments of its programs and services as compared to its primary mission.”

That includes finding programs and services that can be eliminated even if they may be “well-intentioned, (but) are of marginal benefit, low performing or of lesser priority.” As for core services, departments are asked to find ways to cut costs through either “tightening program eligibility, reducing program benefits or cost shifting.”

“Difficult and painful decisions must be made for this review,” he wrote, “but the alternatives are worse — more vacant positions, more deferred maintenance or payments for every program and service.”

The state budget, which Abercrombie signed into law Thursday, calls for $11 billion for the fiscal year that starts July 1 and $10.9 billion in fiscal 2013. That includes $5.4 billion in general funds the first year, and $5.5 billion in general funds the following year.

UPDATE: The state’s budget director, Kalbert Young, told Civil Beat that years of across-the-board budget cuts have meant the state is unable to provide many programs and services at a level “desired or expected from the public.”

“Any further funding reductions would be more prudently implemented to eliminate those programs which the state can no longer sustain, and instead should focus on delivering critical, core, prioritized services — at levels that taxpayers would consider sufficient,” Young wrote in an email. “Of course every program is important to somebody. And, a case can be made for every single one of them. However, the financial reality is that identifying where to cut $50 million more again for one more year — actually, each of the next two years — is going to be difficult because so much has been cut already.”

Attached to the governor’s memo is a list of 14 “criteria for review of programs and services.” The list includes:

  • Program is not a required government function
  • Program is not a New Day Plan priority
  • Program may be privatized or accomplished by the private sector
  • Program serves a target group/population
  • Program does not fit/mesh with primary mission of the department/agency
  • Program serves more as another layer of oversight than direct service delivery or critical service support

Departments that receive general fund money for operations are being asked to achieve cuts equal to 5 percent of their general fund appropriation for fiscal 2012 — after taking out estimated 5-percent labor cuts, debt service, health benefits and pension contributions and FICA costs.

But the University of Hawaii and the Hawaii Health Systems Corp. (the network of state-run community hospitals) are being asked to come up with proposed cuts at three levels: $10 million, $15 million and $20 million. A $10 million cut to the general fund portion of UH’s budget next year — $386 million — would amount to about a 2.6 percent1 cut.

Departments that do not get general funds “are encouraged to conduct their own modified reviews … with the aim toward increasing program efficiency and effectiveness,” the memo said. (Three departments — Commerce and Consumer Affairs, Hawaiian Home Lands and Transportation — do not receive any money from the state’s general fund for operations.)

The memo sets an ultimate deadline of implementing budget cuts by August 9. Departments have until July 8 to submit a review worksheet (attached to the memo) and proposed budget reductions to the Department of Budget and Finance.

Here’s the full memo, which runs 10 pages including attachments:

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