There is no “immediate need” to consider pay cuts or furloughs for public workers to cope with the budget crisis triggered by the coronavirus, according to a video statement recorded by Gov. David Ige and distributed to public employees this week.
Ige said in the video that he is working with state lawmakers to find ways to cover a huge budget shortfall, which Ige estimated will be $1.5 billion over the next 15 months. Lawmakers contend the shortfall will be closer to $1 billion in the fiscal year that begins July 1.
‘There is no immediate need to consider pay cuts or furloughs,” Ige said in the video. “This is the last thing that anyone wants to do, and I’m hopeful that we will find ways to narrow the budget gap. I want to assure you that we are exploring every option, including looking at federal sources of support.”
Ige told public union worker leaders a month ago he was planning to impose 20% pay cuts on public workers as early as May, which would be the first time the state has imposed public worker pay cuts since the “furlough Fridays” of the Great Recession. Ige later amended his statement to say there would be no pay cuts before June.
The pay cut plan immediately encountered resistance from House Speaker Scott Saiki and Senate President Ron Kouchi as well as the public worker union leadership, and U.S. Sen. Brian Schatz and others suggested Ige wait to see if additional help might be coming from the federal government.
Schatz and others also urged Ige to consider borrowing money from the federal government through the Federal Reserve’s Municipal Liquidity Facility. Hawaii is eligible to borrow as much as $2.1 billion through that program, money that would have to be repaid within three years.
State lawmakers, meanwhile, said they have cobbled together a spending plan that will allow the state to avoid public worker pay cuts next year, assuming that the current budget projections don’t get any worse.
Ige said Wednesday that “pay cuts would be the absolute last resort. We were always looking at other ways to balance the budget, to look at reduced revenues coming in and managing the cost of state government. We continue to advocate with the federal government for additional aid to states.”
He said additional federal aid to states remains “the No. 1 issue” for both Republican and Democratic governors across the country.
“We will continue to advocate for that,” he said.