A budget is always a work in progress, but rarely to the degree it is this year, when the economy is in a tumble and nobody can be sure where things will land.

Gov. Linda Lingle has presented a spending plan to the Legislature that combines judicious cuts and an injection of anticipated federal stimulus funds to forestall serious reductions in public services, especially to the poorest in the community.

But both the administration and the Legislature will have to contemplate further measures Thursday when the state Council on Revenues presents its latest projections of the money Hawai'i will have to spend. Nobody's expecting encouraging news.

Until they're armed with the most current information, it's hard to know precisely where to draw the line between the two options available: reductions in spending and increases in revenue.

So far the governor's balance seems reasonable, spread among several components. For now it avoids tax increases and layoffs, a sensible position for avoiding further distress to the economy. If prospects darken with the council's report, however, austerity measures common in a recession, such as furloughs for employees, should be added to the options list.

On the revenue side, Lingle is helped substantially by $320 million in federal stimulus funds for Medicaid programs to close part of the $650 million gap in the budget through the end of the current fiscal year and the next two.

She is proposing that Act 221 investment tax credits be tightened so the state could recoup an estimated $44 million. That move is long overdue.

Other boons to the state's coffers would include a redirection of interest earned by some special funds into the general fund, and a one-time bookkeeping fix that would collect the general excise tax for June 2009 earlier, so that it brings in a windfall for the current fiscal year.

On the spending-cut side, success will require an understanding by all players that the pain will have to be shared across the board.

A proposal to redistribute Hawai'i's share of the federal tobacco settlement and the state's cigarette tax revenue would help replenish some of the rainy-day fund that the administration wants to tap for the deficit. This is a prudent move as the economy heads into uncharted territory.

But it would also reduce funds available to the University of Hawai'i's Cancer Research Center of Hawai'i, which should command attention from lawmakers. The center, which has reached a critical phase in its development, should be shielded as much as possible. UH ought to step up with a contingency plan of its own to keep the center's new campus construction — and the renewal of its National Cancer Institute designation — on track.

The greatest challenge ahead is in brokering an agreement with the state's public-employee unions up for contract renegotiation. On the table will be the health benefits plan; as currently written, the plan faces a 29 percent increase in costs, which the state clearly can't afford now.

The state has offered its workers a generous benefits package over the years that has included full premium coverage for life insurance. Now seems the time to eliminate that for an $8.4 million annual savings.

It's a given that raises are off the table this year, likely replaced by possible concessions. Furloughs need to be considered.

Lawmakers, always prey to the heavy lobbying by unions, may find it awkward to press workers to "share the pain" when they declined to wave off their own fat raise this year. They will surely be tempted to raise taxes instead.

When the forecasts are updated it will be clearer whether tax increases are avoidable. But in the interest of providing the foundation for economic recovery in Hawai'i, siphoning off more money from the taxpayers and businesses — money that should be spent buoying the private sector — should be the solution of last resort.