LOS ANGELES - Gov. John Waihee of Hawaii last week proposed "in essence a zero-growth budget" for the 1993-95 biennium to accommodate a revenue slowdown in the state.

Past strength in Hawaii's construction and tourism industries helped the state "forestall the full effects of the national recession," the governor said in a written budget message to the Legislature.

"But we, too, have not been spared the consequences of a depressed national economy and more federal regulations without corresponding federal assistance," he added.

As a result, Waihee proposed general fund budgets of $2.91 billion in fiscal 1994 and $2.89 billion in fiscal 1995, up slightly from about $2.8 billion in the current year. The 1993-95 biennium begins July 1,

The overall request reflects a "policy of requiring all programs to hold the line, determine priorities, and find alternatives for new requirements," Waihee said.

He said the tight budget reflects recent downward trends in revenues, due mainly to a decline in tourism and construction activity.

Hawaii's Council on Revenues last month "forecasted a negative growth rate for general fund revenues for the first time in a decade," Waihee said. The projected decline of 0.5% applies to this fiscal year.

By contrast, actual revenues rose 11.2% in fiscal 1991 and 1.5% in fiscal 1992.

The proposed budget assumes revenue growth of 3.9% and 4.8% over the next two fiscal years, respectively.

Regarding capital investment, Waihee said he believes "that substantial resources have been made available in the past to upgrade the state's infrastructure." Accordingly, he proposed in the next biennium "that we concentrate on the completion of these ongoing projects."

His budget includes capital investment requests of $555.3 million in fiscal 1994 and $271.6 million the following year. The proposed means of financing include $90.6 million of general obligation bonds and $262.2 million of revenue bonds in fiscal 1994, and $2.4 million of GOs and $102.9 million of revenue bonds in fiscal 1995.

In addition to those debt requests, Waihee also has proposed converting funding for about $111 million of fiscal 1993 projects to GO bonds rather than relying on a pay-as-you-go basis. Such a move would allow the state to conserve more money in its general fund.

Hawaii projects a carry-over balance of $221.2 million on June 30, 1993.

Waihee's proposed budget anticipates a general fund balance of only $3.4 million at the end of the 1993-95 biennium, even "with a zero-growth budget with no allowance for inflation." That level, he added, is "far below what I would like to see in our financial plan."

The Legislature will begin examining the budget proposals when it convenes in January for the 1993 session.

Waihee singled out Hawaii's Medicaid program for special attention, noting that shortfalls of about $190.6 million could develop over the next two years if payments continue growing at a tremendous rate. The Department of Health Services already is mulling several cost-saving measures, he noted.

Hawaii has about $2.5 billion of GOs outstanding. Moody's Investors Service and Standard & Poor's Corp. rate the bonds double-A.

The state plans a GO sale in January that could total about $190 million of new-money and refunding bonds.

To close his message, Waihee quoted a recent Moody's evaluation that underscored the state's reputation for sound financial management. He encouraged legislators "to safeguard the gains already made and ensure progress for the future."

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