Military leaders and contractors say automatic federal spending cuts will have a snowball effect on Hawaii businesses and taxpayers.
Rear Adm. Denny Wetherald of the U.S. Pacific Fleet told Hawaii lawmakers during a hearing today that the impact of the $85 billion federal budget cuts on Hawaii’s military industry will emerge gradually over the coming months.
“Instead of the analogy of falling off a (fiscal) cliff, it’s more realistic to see sequestration as falling down a long, steep and bumpy hill, painfully hitting rocks along the way,” said Wetherald, using the political term for the federal spending cuts enacted last week.
Furloughs for Department of Defense employees could bring pay cuts up to 20 percent and are expected to start in April. Maj. Gen. Darryll Wong of the Department of Defense says under the worst case scenario, civilian workers could lose $24 million in wages this year alone.
Wong and other military leaders present told lawmakers at today’s that they are holding out hope that Congress approves military appropriations before furloughs and other spending cuts materialize.
But some effects are already visible.
Ben Nakaoka of Pacific Shipyards International told lawmakers that Ship Maintenance, a military subcontractor and subsidiary of Pacific Shipyards, has already cut 60 percent of its employees.
“Two months ago, we had a staff level of about 100 employees,” Nakaoka said. “A month ago we were down to 60. Two weeks ago, we were down to 40 employees working part time.”
Alan Hayashi from BAE Systems said the military contracting company has already let go 70 employees and could furlough or terminate another 250 people.
Hawaii would be hit harder by defense cuts than any other U.S. state on a per capita basis, said Charles Ota, of the Hawaii Chamber of Commerce.
The military industry is worth $14.7 billion in Hawaii.
Ota says the Army, Navy and Air Force plan to cut spending by $500 million this year in the Pacific region.