Lingle Offers Budget

Gov. Linda Lingle last week submitted her biennial budget proposal to the Hawaii Legislature, responding to a weakening economy with cuts in ongoing programs.

At the same time, the state is planning to ramp up bond issuance as part of a plan to stimulate the economy by accelerating capital improvement projects.

“In this current economic environment, we cannot operate in a business-as-usual fashion,” Lingle said in her budget message to the Legislature. “Difficult but necessary decisions have been made to reduce overall spending. I am satisfied that this biennium budget being proposed to you reflects the kind of fiscal prudence and discipline the people of Hawaii expect during these challenging times.”

The budget calls for $5.36 billion in general fund spending for fiscal 2010 — down from $5.48 billion budgeted in the current fiscal year. Spending in the second year of the two-year budget would rise to $5.46 billion.

Plans include extensive restructuring of the state’s debt portfolio, predicted to save Hawaii more than $200 million over the two-year budget.

“Debt restructuring has been an important tool of fiscal management as we seek to find market opportunities for reducing the debt service costs of the state’s borrowing program,” according to Lingle’s budget message. “We plan to aggressively pursue debt restructuring in the coming months as uncertainty in the credit markets abates.”

That uncertainty has already affected the state’s debt plans, as it was forced to scale back a $626 million general obligation bond issue pegged for this fall into what finally became a $228 million issue that priced Dec. 3.

On Dec. 15, Lingle announced plans to accelerate the state’s capital spending plans, in an effort to gear up public construction activity in the wake of significant drops in new building permits.

The Lingle administration’s five year plan calls for $6.27 billion of new bond issuance.

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