An estimated 10,160 state employees will face twice-a-month furloughs beginning Jan. 1 and the number will be even higher when Department of Education and University of Hawaii employees are included, Gov. David Ige announced Wednesday as he struggles to balance the state’s budget and plug a projected $1.4 billion shortfall over each of the next four years.
The furloughs represent another casualty in the era of COVID-19 that has devastated Hawaii’s economy and are an attempt to prevent the layoffs of 4,000 state employees.
“The pandemic has had harsh economic impacts on our country, and as a result, every state is having to make difficult choices,” Ige said. “Hawaii is among the hardest hit states in terms of job loss and lower economic activity, because of the state’s reliance on tourism.”
The furloughs are designed to save the state $300 million annually and Ige said that an unspecified number of layoffs remain a possibility.
Randy Perreira, the head of the Hawaii Government Employees Association — the islands’ largest public workers union — said the actual number of employees facing furloughs starting with the new year is “something over 30,000 individuals” when DOE and UH employees are included.
Ige said DOE and UH workers will have different furlough schedules in order to provide the required number of educational days so students can move up to their next grade level.
With Ige announcing additional program cuts of $600 million annually, Perreira said that furloughs won’t be enough for Ige to produce a balanced budget, as he’s required to do next week.
With program cuts, Perreira said, “it’s going to be furloughs plus layoffs. It’s not going to be one or another.”
The furloughs will compound the economic hit to individual union members who became the sole breadwinners in their households after a spouse or significant other lost their private-sector jobs in the economic fallout of COVID-19, Perreira said. Some members lost their own second jobs in the private sector that were keeping them afloat, he said.
“We explored all other options for balancing the budget and have tried to avoid furloughs,” Ige said. “I know how hard state employees have been working during this difficult period and I realize how much distress this will cause our employees and their families. However, the harsher alternative to furloughs is layoffs, which has already complicated the lives of thousands of fellow citizens who work in the private sector.”
Ige expressed admiration for state workers and said the decision to impose furloughs is intended to save jobs and came “with a heavy heart.”
“They make me proud,” Ige said.
Ige and his cabinet members are taking pay cuts of 9.23% that are commensurate with the two-day-a-month furloughs, he said. Their pay cuts will begin Jan. 1 and appear in their Jan. 20 paychecks.
The furloughs represent the last piece of Ige’s effort to balance the state budget that he said already include:
>> Removing $197 million of the executive branch’s 2021 fiscal year supplemental budget request. The Legislature further reduced the 2021 fiscal year base budget by $205 million.
>> Saving $390 million by suspending pre-funding of state retiree health benefits liabilities.
>> Instituting a hiring freeze on 3,000 “non-critical” job vacancies.
>> Issuing $750 million in short-term bonds to cover current operating expenses.
>> The Legislature also authorized the transfer of $345 million of rainy-day fund reserves and $303 million from other funds to the general fund budget.
The upcoming furloughs include several exemptions for job categories including first responders, Hawaii firefighters and others who work in “24/7” operations such as public hospitals, jails and correctional facilities.
The furloughs also will not apply to workers funded with non-general fund sources. They include about 4,600 employees who are first responders, medical and public safety personnel and employees at the departments of Commerce and Consumer Affairs and Transportation.
Ige emphasized that the planned furloughs will be rescinded once the budget picture improves and “as soon as (they’re) no longer needed.
“We will adjust as the economy recovers,” he said.
Hopes are rising that Congress will provide another round of COVID-19 federal funding to help struggling states and counties.
“We would appreciate any additional Congressional and federal assistance,” Ige said.
But any further COVID-19 related funding is unlikely to help balance the state budget.
The current CARES Act funds are intended only to directly address COVID-19 and specifically prohibits them from being used to make up for any budget shortfalls.
“The CARES Act explicitly said that it could not be used as revenue replacement and cannot be used to cover any existing budget item,” Ige said.
Following Perreira’s comments to reporters, he and the leaders of Hawaii’s three other public workers unions — the Hawaii State Teachers Association, University of Hawaii Professional Assembly and the United Public Workers — blasted Ige’s furlough plan in a joint statement and pledged to “pursue all legal avenues to stop the unilateral implementation of these furloughs.”
“These furloughs and planned budget cuts, announced just before the holidays, couldn’t come at a worse time,” they said in the statement. “A study released this spring found that every $1 reduction in state employees’ salaries would result in a $1.50 reduction in overall economic activity in the islands.
“Under Ige’s plan, thousands of public workers would be affected, including teachers, educational assistants, custodians, groundskeepers, cafeteria workers, social workers, university professors, engineers, building inspectors, those who care for our most vulnerable populations, and hundreds of other positions.
“Our elected leaders must do everything possible to avoid repeating the devastating history of the furloughs in 2009 and 2010, when public offices and facilities were forced to reduce their hours, and some — schools included — closed for several days a month. The public had to contend with services that were eliminated or endure scaled-back or delayed services while our children were denied a quality public education.”