State revenues fell by 9.4 percent last fiscal year, the state Department of Taxation reported today, which is worse than the 9 percent projected by the state Council on Revenues and increases the state’s budget shortfall.

The Lingle administration had estimated a $730 million shortfall through June 2011 based on the council’s prediction in May. The new revenue figures, based on actual fiscal year-end collections, would increase the shortfall by $56 million to $786 million.
“We will not be the same government when we come out of this process,” Lingle told reporters at the state Capitol. “We can’t be the same government we were a year ago and survive financially because we have billions of dollars less money than we had counted on, so we can’t possibly look the same or act the same. The world has changed. We need to respond to it.
“There are some people who can’t yet accept that the world has changed dramatically over the past year. And everyone has to accept that fact, so that we can design our new future.”
State House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo Valley, Wilhelmina Rise), said that the governor could opt to make spending restrictions to manage the shortfall until lawmakers return for the next session in January.
Lingle stressed that her administration continues to believe that furloughs, not layoffs, are the right approach to closing the deficit. She said the administration is still thinking about challenging a Circuit Court ruling last week which found that the governor does not have the authority to unilaterally impose furloughs. The court found that furloughs should be subject to collective bargaining.
Lingle said she has concluded discussions with state department directors about potential layoffs and expects to give public-sector labor unions a letter with a list of names by the end of the week. The governor is required under the terms of existing labor contracts to give unions a 90-day notice of layoffs.
The notice to unions will likely include the names, positions and bargaining units of state workers identified for potential layoffs. Individual layoff notices to state workers would likely occur after the state and the unions consult on the list.
Lingle has said previously that she could lay off 2,500 state workers under her direct control, while spending restrictions to the state Department of Education, University of Hawaiçi and the Hawaiçi Health Systems Corp. could trigger additional layoffs.
The governor said layoffs would likely be concentrated in departments that rely on general-fund revenue to operate, so departments such as the state Department of Hawaiian Home Lands, the state Department of Commerce and Consumer Affairs, and the state Department of Transportation would likely see few layoffs.
Union leaders have said that, instead of threatening layoffs, Lingle should bargain for new contracts. The governor has said the state is awaiting a formal offer from unions.
“It has to be something serious that takes into consideration that we have not bottomed out yet in our loss of tax revenue or in the shrinking of the economy,” Lingle said.