The Pew Charitable Trusts

Hawaii Gov. Linda Lingle (R) on Jan. 25 laid out an ambitious agenda for her final year in office, proposing tax credits to stimulate clean energy jobs, strengthening the education department by putting it in the governor's Cabinet and creating a budget stabilization fund to help protect the state's finances.

Lingle, who is limited by law to two terms, signaled that she did not intend to spend her final year as a caretaker chief executive. Her speech was laced with specific plans to help Hawaii recover from its worst economic downturn in modern times. "We must face the situation as it is - not as we wish it to be - and we must make difficult decisions now about the size and nature of government that will keep us on a positive course for the future," she told lawmakers.

Hawaii is struggling to close a $1.2-billion budget shortfall this fiscal year and next and is worse off than many states because its economy is so dependent on tourism. Lingle already made drastic cuts and layoffs the last two fiscal years, including furloughing teachers, which shortened the school year. She told the Democratic-controlled Legislature that the government would require more downsizing.

"Simply put, our state government is spending at a rate that substantially exceeds our revenues and at a level that cannot be sustained," she said to an audience that included Republican National Committee chairman Michael Steele, who was in Honolulu for the committee's winter meeting.

Lingle recommended that lawmakers approve placing a constitutional amendment on the ballot that if approved would set up a budget "stabilization fund." Essentially, it would act as a rainy day fund during fiscal emergencies. As tax revenues grow, 5 percent of the state general fund year-end balance would go into the stabilization fund.

"This fund will shield us in future years from the need to raise taxes during periods when the economy is contracting and citizens can least afford to pay more," the governor said.

Long term, Lingle said, Hawaii should embrace the clean energy economy to generate jobs. As a first step, she asked lawmakers to ban the construction of new fossil fuel-burning power plants.

She also proposed a package of energy tax credits, including exempting renewable energy projects from general excise taxes, offering tax rebates on the sale of electric and hybrid vehicles and establishing a bond program.  "Similar programs, which already exist in 15 states, assist residential and commercial property owners with the upfront costs of installing clean energy systems or energy efficiency upgrades by allowing them to borrow the money from the state and then repay the loans over a period of years via an annual assessment on their real property tax bill," Lingle explained.

Lingle said the most pressing education issue is accountability. "The time has come to focus not only on the number of days children are in class, but on what they are learning during those days. The current school system lacks clear lines of authority, responsibility and accountability," Lingle said in proposing that the governor hire the state school superintendent and include that person in the Cabinet.