Gov. David Ige is continuing to give strong indications this week that layoffs and/or furloughs may be in the future for state workers.
The state general fund budget is facing a drop in tax revenue that will result in a shortfall of roughly $1.5 billion as the impacts of the COVID-19 pandemic continue to ravage Hawaii’s economy, Ige said Monday on the Honolulu Star-Advertiser’s Spotlight Hawaii program.
Ige estimated that’s roughly a 25% hit to the general fund budget.
Asked by program hosts Ryan Kalei Tsuji and Yunji de Nies whether layoffs or furloughs are still being considered, Ige said, “I wish I could say some of those things were off the table, but I think it’s very clear all of those are on the table as we speak. We are looking at reductions in spending that we can control — the nonpersonnel-related parts of the budget.”
But given that 60% of general revenue expenses is comprised of salaries, fringe benefits, retirement contributions and other personnel costs, it’s difficult to envision employees won’t be affected, he said.
“Making a 25% reduction when 60% of it is personnel really does end up impacting personnel costs,” the governor said.
“Every department and agency will be impacted,” Ige said. “There’s nobody that will be spared. We will be forced to be cutting public education and the university, as well as social, safety net programs.”
Ige and the Department of Budget and Fiscal Services formally hand over next year’s proposed budget package around the middle of the month.
For the first time in the state’s history, the state borrowed $750 million through bonds “to help make payroll,” Ige said. “That gives us a little bit of flexibility, but not much.”
Ige first proposed 20% pay cuts for teachers and other public workers in April, a plan that met with quick pushback from union officials and state lawmakers.
The governor again warned about the possibility of government employee furloughs, layoffs and pay decreases in June even as state lawmakers were approving pay raises for them.
The legislative leaders in charge of budget matters in both the state Senate and House told the Star- Advertiser they want to see more information before concluding whether layoffs or furloughs are necessary.
“I think even the governor recognizes that furloughs and layoffs should be the last resort,” said House Finance Chairwoman Sylvia Luke.
“When he brings down the budget (later this month), then we can take a look in what areas we can restructure government, where we can find cost savings, where we can use special funds to supplant general funds,” Senate Ways and Means Chairman Donovan Dela Cruz said.
As for layoffs and furloughs, “we may end up having to inevitably do that, but I think there are a lot of things we should be doing before we do that,” Dela Cruz said.
“I still think this is an opportune time to look at how we can reorganize government so that we can live within our means and be a little more proactive with other things,” he said.
Looking at which state employees can work from home and which agencies can merge are among some things the administration should look at before resorting to layoffs or furloughs, he said.
Noting that roughly 20,000 of the approximately 75,000 state employees are eligible for retirement, a hard look should be taken at which jobs can be left unfilled when existing workers leave, Dela Cruz said.
“There’s lots of things we can do. It’s just going to take a lot of hard work,” he said.
Meanwhile, pressure needs to be put on those state employees tasked specifically with finding or expanding industries to ween Hawaii from its dependency on tourism, Dela Cruz said.
Like Dela Cruz, Luke thinks freezing positions when employees retire will bring significant savings.
She said that Ige is suggesting a four-year furlough program, something that’s not well thought out because ”legally that’s not possible.”
Not only do the worker unions need to approve such a step, but the furlough program can’t be longer than the term of a bargained contract, Luke said. “And I believe most of the contracts expire in June.”
Because state lawmakers do not have many details on how the governor intends to implement the reductions, Luke said, at this point “it’s been difficult for the Legislature to even look at different alternatives, because what’s he trying to implement is not possible under the current legal framework.”
Asked his thoughts on Ige’s comments, Hawaii Government Employees Association Executive Director Randy Perreira said his union can appreciate the tough situation everyone in the state is facing until more activities can reopen.
“While we understand the governor’s suggestion that these negative ideas must be on the table, we certainly hope and expect that the governor and other elected officials do whatever they can to make these cuts a last-resort solution, if not avoid them altogether,” Perreira said in a statement.
“As bad as our tax revenue picture is, the negative consequences of cutting wages and programs is equally obvious: Wage cuts will likely spin us into a recession, making our already weak economy fall off a fiscal cliff,” Perreira said. “And drastic program cuts at a time when so many of our residents are in need of assistance will have a devastating social impact on our state.”
On Wednesday the Hawaii State Teachers Association voiced its concerns about proposed budget cuts that would result in the loss of 1,000 teachers, including special-education teachers.