The state Senate Ways and Means Committee approved the Senate’s draft of the budget yesterday, which would preserve the equivalent of two furlough days a month for state workers to help contain costs through the next two years.
The committee’s draft, which now goes to the full Senate, involves $11 billion in spending for fiscal year 2012 and $10.8 billion in spending for fiscal year 2013. The draft is slightly higher than the House version of the budget in 2012 but less than in 2013. Both Senate and House drafts are lower than the budget proposed by Gov. Neil Abercrombie.
The Senate recommends $5.4 billion in general fund spending in fiscal year 2012 and $5.5 billion in fiscal year 2013. Lawmakers and the governor have more discretion over the general fund portion of the budget.
All three versions of the budget — Senate, House and Abercrombie’s — call for higher overall spending than the fiscal year that ends in June.
Sen. David Ige (D, Aiea-Pearl City), chairman of the Ways and Means Committee, said the Senate draft contains more than $650 million in savings, with about half coming from preserving furloughs at existing levels. Ige said the Abercrombie administration could achieve the labor savings through steps other than furloughs.
“We would encourage the governor and the collective bargaining unions to find creative solutions to yield savings that will allow government to continue to offer the wide array of services that are in great demand,” Ige said.
Abercrombie’s budget included labor savings equal to one furlough day a month, but the matter is subject to collective bargaining with public employee unions.
House leaders chose not to include any figure for labor savings in their draft because they do not want the perception they are influencing contract talks.
House Republicans, in their alternative budget, suggested the equivalent of two furlough days a month.
Abercrombie had said during his campaign last year that he would not pursue furloughs or pay cuts for state workers, but that statement was based on his understanding of the state’s revenue picture at the time.
The state is now projecting a $1.3 billion deficit over two years.
“I thought that it would be more productive to at least reflect some labor savings in the budget because otherwise, the reductions required would be so enormous that it would create a whole lot of churn by a lot of different departments when we know for a fact there will be some labor savings,” Ige said.
Senators also recommend evenly splitting health care premium costs with state workers. The Abercrombie administration has agreed with the unions that the state will pay 60 percent of costs through the end of the fiscal year in June and is negotiating the split in contact talks.
Unlike the House, the Senate puts aside money to cover court-ordered Medicaid costs for migrants from Micronesia, the Marshall Islands and Palau. But the Senate only covers the health care costs for one fiscal year, presuming that the state will be successful at getting Congress to pick up the expenses in future years.
Like the House, the Senate determined that there is a limit to state program cuts in the aftermath of the recession. With so much of the budget consumed by education, social services and health care programs — and a strong interest among senators to protect those areas as much as possible — senators found that even drastic cuts to other programs would not save enough money to make a significant difference with the deficit.
“You could wipe out 10 departments and still not balance the budget,” Ige said of the concentration of spending in education and human services.
But Senate Minority Leader Sam Slom (R, Diamond-Hawaii Kai) said that while Ige and other senators made “earnest efforts to try to reduce this behemoth,” the Senate draft still would increase spending.
“We’re not really talking about systemic, programmatic cuts. We’re not really talking about changing the direction of our state. And so basically what we’re doing is cutting around the edges,” said Slom, the only senator on the committee to vote against the budget draft.
Senate and House negotiators will meet later this month in conference committee to come up with a final budget to send to Abercrombie.
The Senate’s capital improvement budget involves $2.9 billion in projects, including $1.6 billion in bond-financed construction, which is more than Abercrombie proposed.
The Senate, like the House and Abercrombie, would rely on separate revenue-generating bills to balance the budget and close the deficit.
Ige said the Senate’s plan will likely include the repeal of a state income tax deduction, a pension tax, a limit on hotel-room tax revenue that goes to the counties and an increase in the liquor tax.
Today the Ways and Means Committee will hear a bill that would raise the general excise tax and temporarily suspend GET exemptions on certain business activities. The two options are the largest sources of potential new revenue to lower the deficit.