Gov. David Ige estimates the state’s general fund faces a shortfall of $1.5 billion over the next 15 months because of tax revenues lost in Hawaii’s economic shutdown.
This assumes an economic recovery in six to 18 months, which is highly optimistic; if new waves of the virus extend the recession, budget deficits would snowball.
To help balance the budget, Ige has floated 20% pay cuts for the state’s unionized public workers. Heading off pay cuts seems the Legislature’s main motive for returning to session, under social distancing rules, for the first time since March 16.
Lawmakers are right that public worker pay cuts and furloughs shouldn’t be the first option. The federal Payroll Protection Act prioritized keeping money in the pockets of private-sector workers, and it’s reasonable for the state to try to do the same for public workers.
Legislators believe they can cover the immediate shortfall from prior-year surpluses, the state’s rainy day fund, unused special funds and targeted cuts.
Good on them if they can make the numbers truly work, but with the caveat that budget cuts shouldn’t come at the expense of safety net programs for our most vulnerable.
And it would be a grave mistake to take pay cuts and furloughs entirely off the table based on magical thinking that assumes deficits will be short term only.
If legislators paint themselves into this corner, their only ways out if troubles persist would be higher taxes on those already suffering so state workers don’t have to suffer at all, drastic safety net cuts, or kicking the can down the road and into an even deeper hole by borrowing from the federal government to pay public worker salaries and pension contributions.
It would be indefensible to burden our children and grandchildren with the cost of borrowing to pay today’s public workers and retirees.
With the climate change challenges our inaction has stuck them with, we should have the decency to avoid strip-mining the financial resources future generations will need.
The Legislature’s first budget cut should be to table funding for tens of millions in negotiated public worker pay raises that have not yet been paid. These were agreed to in a radically different economy.
And lawmakers must earn public faith by rescinding 10% pay raises scheduled to be added to their own $62,604 salaries in January.
These raises were proposed by the state Salary Commission in far different circumstances from what we now face and can no longer be justified — especially with legislators likely to drop increases in the minimum wage for the lowest paid among us.
Reach David Shapiro at email@example.com.