Members of Hawaii Gov. Linda Lingle’s administration testified before the state Senate Ways and Means Committee Monday, asking lawmakers to reject a bill that would restrict the governor’s ability to cut the budget.
The administration says SB 2007, would limit the authority of the governor and finance director to restrict the release of funds, reduce allotments, or suspend or abolish existing programs, even if Hawaii does not have sufficient revenue to pay for them.
The committee passed the bill despite the testimony. Lingle is a Republican in her last term, while the Legislature has large Democratic majorities.
Lingle’s budget director, Georgina Kawamura, submitted testimony arguing that such limits on the governor’s authority could adversely impact the state’s ratings.
She said the executive branch’s authority to reduce expenditures has been cited by all three major rating agencies as a credit strength and a determining factor in maintaining Hawaii’s favorable ratings.
It’s not an academic question — the governor’s office has used its mid-year budget-cutting authority over the last year and a half as the recession hammered the state’s tourism industry and state tax revenue.
Hawaii general obligation bonds are rated at the double-A level across the board — though Moody’s Investors Service assigned a negative outlook before the state’s most recent bond sale this week. Fitch Ratings has a negative outlook as well, and Standard & Poor’s has a stable outlook.
Hawaii priced $721.6 million of bonds this week, including $500 million of new-money Build America Bonds.
In another example of the state’s tight budget, the Department of Taxation Monday formally announced that it would not issue income tax refunds for calendar year 2009 until after the new fiscal year begins on July 1 — an action the administration announced earlier as part of its effort to keep the fiscal 2010 budget balanced.
