Gov. Linda Lingle released an updated budget plan to the state Legislature

today that uses federal stimulus money and wage and benefit cuts to state

workers to help close the state's budget deficit.

The governor would use federal money meant for public education to close the

$90 million deficit for the fiscal year that ends in June and a combination

of federal education money and wage and benefit cuts to erase a $165 million

deficit over the following two years.

The wage and benefit cuts are subject to collective bargaining negotiations

with public-employee unions.

Lingle also said she would use $14 million in federal stimulus money meant

for Medicaid to help public hospitals on Kauai, Kona and Hilo pay debts to

vendors. The state is negotiating separately with struggling Maui Memorial

Medical Center on the terms of loan to pay debts and operating expenses.

Lingle's new proposal avoids tax increases and layoffs and would produce a

projected $160 million budget surplus at the end of June 2011

State schools superintendent Pat Hamamoto and some state lawmakers have

complained about Lingle's use of federal education money to close the

deficit this fiscal year. Hamamoto would prefer that the federal money be

used to offset state spending cuts.

But Lingle said the federal money is needed given that she has only three

months to close a $90 million shortfall.

Lingle also said her budget plan would restore cuts to public schools and

the University of Hawaii contained in the state House draft of the budget.

The state Senate Ways and Means Committee is preparing to go through its

draft of the state budget and senators will take Lingle's plans into

consideration.