Conventional wisdom for the 2013 version of the state Legislature is that we are entering fat city. The economy is turning and things are only going to get better.

Before the lawmakers set the state credit cards on max stun, there are a few cautions coming from both the House and Senate budget committees.

If you count everything, the state’s yearly budget is more than $11.5 billion and growing.

The part of the budget that you can get your hands on and move around is made up of what are called "general funds." Most of that budget is a list of the things you have to pay every year: salaries, pensions and the light bill.

Sen. David Ige, Ways and Means Committee chairman, says in his committee report on the budget that three-quarters of the general fund budget is made up of those fixed costs.

For instance, just the cost of restoring the public work-er pay cuts taken during the recession adds $78 million a year to the budget.

There are warnings galore.

Perhaps the most serious hand-wringing comes from the Rep. Sylvia Luke’s Finance Committee report, which notes that 23 percent of Hawaii residents are on some version of the joint federal-state Medicaid program.

The state Health Department is asking for increases of $207 million for the next two years for the health care payments.

The total state-federal costs are $4 billion, with the state’s general fund share to be $1.8 billion for two years.

"Hawaii offers a Medicaid benefits package that is among the nation’s most generous," Luke’s report says.

She warns that Medicaid costs are expected to grow and that "without an accompanying effort in managing costs it will be unsustainable."

Luke warns that if something isn’t done, perhaps by a special study committee during the legislative offseason, other state programs and services will have to be cut to pay for Medicaid increases.

That means that the hope of both budget committees to add something as simple but important as 32 new janitor positions at Honolulu Airport may go instead to increased Medicaid bills.

Ige is a former education committee chairman and knows how to see between the educational prevaricators and the educational innovators within state government. So when his report points to continuing problems within the Department of Education, it is noteworthy.

"Your committee finds that the Department is still mired in bureaucratic inertia," he reports, adding that, "Your committee has grave concerns with the Department’s ability to monitor and track its resources."

For instance, Ige says he asked for a report on all temporary positions established by the DOE and learned that the DOE has more than 1,000, and that they go on year after year, even though state law says "they shall not exceed a one-year term."

"Your committee finds these actions, or lack thereof, disturbing," Ige notes.

Luke complained about the state’s Health Department, noting that it seems to be in the throes of an undefined reorganization.

"The department’s five-year financial plan … lacked an explanation of how the department’s movement of funds and positions justifies its extensive, multiple, and prolonged internal reorganization initiative and financial plan," the report stated.

Luke warned that she did not want to toss state money for programs "that were eliminated due to insufficient oversight, inefficient administration, ineffective outcomes and most importantly duplicative services …"

The state budget is a three-act play and we are just two acts into the drama, with the big finish coming with the conference committee.

Then we will find out how much the play was worth, because one way or another, we will pay for it.

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Richard Borreca writes on politics on Sundays, Tuesdays and Fridays. Reach him at rborreca@staradvertiser.com.