The House Finance Committee advanced their version of a state budget on Wednesday, cutting funding for many of Gov. Neil Abercrombie‘s proposals and calling for $10.98 billion in spending in fiscal 2012 and $10.97 billion in fiscal 2013.
While the House version grows spending by 6 percent over the current year’s budget, it’s still 4 percent smaller than the $11.4 billion budget the governor proposed last month for the 2012 fiscal year.
Here’s a look at House Bill 200’s budget plan next to Abercrombie’s budget:
House Finance Budget
$11.4 billion ($5.7 billion general funds)
$10.98 billion ($5.45 billion general funds)
$11.3 billion ($5.9 billion general funds)
$10.97 billion ($4.94 billion general funds)
House Finance Chairman Marcus Oshiro said the committee cut about $120 million in annual spending that Abercrombie had proposed, including his plans to fund increased Medicaid and welfare benefits. It also cuts out the governor’s proposal to continue to cover 60 percent of employees’ health premiums in 2012 and 2013.
Other savings come from a “3 percent overall cut through the different departments,” Oshiro said.
The House budget does include about $200 million to make up for the cost of restoring furloughs after June 30 as well as $40-million payment owed to the Hawaii Employees’ Retirement System from 2009, Oshiro said.
“Certainly, people will not be pleased with some of the decisions,” Oshiro told committee members. “We still cannot afford the budget before us.”
Along with the cuts to the operating budget, Oshiro said the committee is counting on about a dozen “revenue enhancement” bills that would generate about $300 million a year to help close the state’s projected $800 million budget gap over the next two years.
Some of these proposals include taxing pension income and repealing state income tax deductions for higher-income earners, capping itemized deductions, and eliminating general excise tax exemptions for certain business activities.
But Oshiro warned: “If any of those cost savings measures die, we’ll have to go back into the budget and cut some more.”
House Minority Leader Rep. Gene Ward wanted the committee to postpone the vote one day and in order to incorporate Thursday’s update from the state’s Council on Revenues into the bill.
Oshiro shot down the suggestion, saying he wanted to get the bill out of committee for a full House vote on Friday. He also expressed some skepticism about the council’s past predictions, which have been known to be overly optimistic.
“It’s anyone’s guess right now what (the Council on Revenue’s) projections will be,” Oshiro said. “For the last seven months, we’ve seen a cumulative negative 2.3 percent in revenue growth versus the council’s projected 3 percent growth. One percentage point is $45 million to $47 million. We need to collect $420 million over next several months to reach their 3 percent goal.”
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