‘Devastating’ cuts

U.S. Sen. Mazie Hirono warned Monday of "devastating" sequestration budget cuts that could cost Hawaii 11,000 jobs, result in furlough days for 18,000 defense civilians and cut into defense contracts that average $2.3 billion a year.

Hirono said 2,200 health care professionals in Hawaii could lose their jobs as a result of reduced Medicare payments, and 16,000 Hawaii students may be affected by cuts to education for Head Start, after-school care and grants for schools.

"Clearly, this is not the way to go," Hirono said during a teleconference with reporters.

The Hawaii Democrat added that "we are working very hard on the Senate side to come up with an alternative that would prevent sequestration with a balanced approach" by looking at revenue sources to offset budget shortfalls rather than just make cuts.

"Let’s close some major tax loopholes to get us there," Hirono said, echoing the Obama administration.

The president wants a second short-term delay in sequestration.

A total of $85 billion in across-the-board spending cuts would have to be made by the federal government over the next seven months if Congress doesn’t act by March 1.

Danny Werfel, federal controller for the Office of Management and Budget, on Friday referred to sequestration, a deal made to avoid the last debt ceiling crisis, as "bad policy that was never intended to be implemented."

If enacted, $1.2 trillion in cuts would be made through 2021.

"It (sequestration) was intended to drive both Democrats and Republicans in Congress to compromise," Werfel said Friday.

The reductions would be about 13 percent for defense programs and 9 percent for nondefense programs for the remainder of the fiscal year, which ends in September.

Werfel said the FBI would have to reduce its law enforcement capacity, the Justice Department would have to furlough hundreds of federal prosecutors, and Federal Aviation Administration cuts would have an impact on air traffic controllers.

"Clearly, FAA is critical (with) our air traffic controllers. Can you imagine the negative impact this would have on tourism to Hawaii?" Hirono said.

According to a new Gallup poll, Washington, D.C., Alaska and Hawaii have the highest percentage of federal, state and local government employees, with 27.8 percent in Hawaii working for government.

The Chamber of Commerce of Hawaii said total spending by the armed services in Hawaii was $6.5 billion in 2009, resulting in direct and indirect impacts exceeding $12.2 billion to Hawaii’s economy, and accounting for more than 101,000 jobs and $3.5 billion in household earnings.

Hirono said many defense contracts in Hawaii would have to be "drastically or dramatically restructured or modified as a result of sequestration."

"That’s where this (sequestration) is challenging for Hawaii, because we have so much dependence on federal government spending in Hawaii — it’s key. It’s not just defense construction spending, it’s federal spending at all levels. We get our disproportionate share in Hawaii," said Bill Wilson, president of Hawaiian Dredging Construction Co.

The Navy awarded Hawaiian Dredging a $52.4 million contract in 2011 for a large construction project at Marine Corps Base Hawaii.

The project includes a new bachelor enlisted quarters, a command facility, and a multi-level parking structure, renovation of existing quarters, and demolition of five buildings.

"There’s uncertainty with every project," Wilson said. "Everything has to be re-evaluated by the military because of what’s being discussed (with sequestration). The budget cuts are so severe, they’ve got to look at every job."

According to Hirono, of approximately 11,000 jobs that could be lost, nearly 8,000 would be as a result of defense cuts, and 3,000 would come from other cuts in Hawaii.

Before Congress pushed back sequestration cuts from January to March, the state Department of Budget and Finance calculated that nearly $32 million in federal spending to state departments was at risk by sequestration.

Kim Gennaula, president of the Aloha United Way, warned in November that if the cuts were not averted, "all the programs that we care about the most are going to be significantly hit. It’s a pretty scary scenario."

The state’s budget director predicted that the Department of Education would take the biggest hit, with $12 million of the $135 million annually it received in federal funds identified as being at risk.

The military in Hawaii has started to lay out its own doomsday scenario with sequestration.

U.S. Army Pacific identified the potential need to make about $175 million in Army cuts in Hawaii this fiscal year by reducing training, maintenance and base support — even as two brigades prepare for deployment to Af­ghani­stan.

A continuing resolution in the absence of an appropriations bill froze spending at lower 2012 levels, but the military says its costs increased, leaving a significant shortfall for the fiscal year.

The $175 million in Hawaii cuts doesn’t even include the further cost of temporarily furloughing more than 1,400 civilian employees, which would be required under sequestration, officials said.

Werfel, the federal controller, said as a general rule, federal employees would have to be given 30 days notice that furloughs are coming.

The Pentagon would have to absorb $46 billion in sequester reductions over the remainder of this fiscal year and a $35 billion shortfall in operating funds for active-duty forces, Defense Secretary Leon Panetta said.

Sequestration would mean the furlough of as many as 800,000 defense civilian employees for up to 22 days and more than 1 million government wide.

Panetta said the measures would shrink western Pacific naval operations by as much as one-third.

The Navy identified the need for $110 million in cuts in Hawaii with steps that included the cancellation of a $35 million repair to the destroyer USS Chafee. That reduction also does not include furlough cuts.

Some see benefits if the sequester were to "trigger" — including former Democratic National Committee Chairman Howard Dean.

CNBC quoted Dean saying, "There’s not going to be any opportunity to cut Pentagon spending in any serious way, if you don’t go over the ‘sequester’ cliff."

"There is some stuff in there that I as a Democrat don’t like," Dean said. "But I think everybody’s going to put something in the pot in order to balance the deficit."

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Star-Advertiser reporter Mary Vorsino contributed to this report.