Organizations and agencies in Hawaii that have relied on federal funding through earmarks are making painful adjustments, including layoffs, as the loss of $321 million settles in across the islands.
Bishop Museum was cut off from $2.2 million in funding from earmarks — funding requests for specific programs made by members of Congress — and on Feb. 8 told 13 employees that they will lose their jobs.
The state Department of Agriculture is preparing for the loss of $900,000 in the fall, when it expects to eliminate nine agricultural inspectors at Kahului Airport on Maui. Only four inspectors will be left to catch invasive species entering the island.
Federal money for the inspectors originally was earmarked more than a decade ago to address environmental concerns about invasive species when the airport was expanded, said Janelle Saneishi, spokeswoman for the state Department of Agriculture.
Like other nonprofits, organizations and government agencies losing federal earmarks, the Department of Agriculture is looking for alternative funding but is preparing for severe cuts.
"We can’t do inspections the way we used to," Saneishi said. "You cannot inspect every single parcel that comes through. With the staffing we have, we can only target high-risk commodities likely to bring in invasive species."
The layoffs at Bishop Museum will be spread among administrative and management employees, and will represent 6 percent of the museum’s workforce.
"It’s a difficult time, obviously, for the community and for nonprofits," said Blair Collis, Bishop Museum president and chief executive officer.
Under the weight of political pressure to eliminate funding for federal lawmakers’ pet projects, President Barack Obama promised in his 2011 State of the Union address to veto any bill containing earmarks.
Afterward, U.S. Sen. Daniel Inouye — chairman of the Senate Appropriations Committee and the avowed king of pork-barrel spending — pledged to ban earmarks for two years.
"When the earmark ban was announced, our economy was in turmoil, and the senator urged previous recipients to adjust their operations to account for the loss of federal support," said Peter Boylan, Inouye’s deputy chief of staff. "We continue to encourage all former earmark beneficiaries to fund-raise, diversify their revenue streams and scrutinize their operational costs to ensure that they can maintain services and retain workers."
Boylan said Inouye remains a strong supporter of earmarks and is working with others in Congress to reinstate the practice.
"Every earmark the senator has supported met a specific need outlined by the requester and was in the national interest," Boylan said. "He firmly believes that those who represent Hawaii in the Congress should determine how federal funds are spent in the state instead of some bureaucrat working out of Washington, D.C."
It’s difficult to measure the true economic impact of the loss off $321 million in federal earmarks for Hawaii because many of the multimillion-dollar, big-ticket items involve military projects, which could be funded in the future.
And layoffs are unlikely in ongoing military projects that will lose money this year or in the next federal fiscal year that begins in October, because the people who run them can be reassigned to other duties, military officials said.
Leroy Laney, a professor of economics and finance at Hawaii Pacific University, said the loss of $321 million in earmarks "wouldn’t be a deathblow to the economy, but we could certainly feel it. Jobs are only barely now creeping into positive territory. With the fragility of the recovery, anything that results in any job loss is important. At this particular juncture it is not a good time."
The University of Hawaii has been able to provide "bridge funding" to sustain projects funded through federal earmarks, said Jim Gaines, UH’s vice president for research.
"In cases where earmark funding covered construction and equipment purchase, we just didn’t do the construction or we put off purchasing equipment and kept personnel employed doing other jobs within the specific programs," Gaines said. "Last year, in 2011, the losses were not large, and the bridge funding we provided or the delays in construction or purchasing allowed us to not lay off any employees. This year there has been no impact to date, and we have not laid any workers off."
The East-West Center anticipated its loss of $4.2 million in federal funding and terminated eight employees in a voluntary reduction in force in mid-2011, spokeswoman Karen Knudsen said.
Then, in October, the East-West Center laid off five more employees in Honolulu and two in Washington. Hours were cut for five employees in Honolulu and one in Washington as the center tried to ease the fallout from the lost funding.
In the upcoming fiscal year, Knudsen said, "the budget process in Washington is still ongoing."
In the meantime, organizations that relied on earmarked funding must figure out how to reallocate and prioritize, said Hawaii economist Paul Brewbaker, principal of TZ Economics.
"This year we’re stuck with the follow-through on a bad approach to fiscal re-balancing that’s been forced upon us by an inability by parties in Congress to compromise," Brewbaker said. "That means it will be harder to manage through because we can’t get to the long-term, more creative solutions to budget balancing until after the November elections."
