Expected $1.4B budget shortfall

LIHU‘E — Over 10,000 state employees will be furloughed beginning the first of new year to account for a projected $1.4 billion budget shortfall within the state’s general fund for the next four years, Gov. David Ige announced Wednesday.

Effective Jan. 1, 2021, 10,160 state employees will have two unpaid furlough days per month, equating to a 9.23% pay cut. Ige, as well as cabinet members, will also be taking an equal cut.

“This difficult step enables a majority to keep their jobs and to continue the public service they provide,” Ige said.

Within one year, the state is projecting these cuts will save $300 million per year.

Employees in first responder capacities, public safety or essential functions will not be affected. Employees in funded positions, like within the departments of Commerce and Consumer Affairs and Transportation, will also not be affected.

Ige said the state has spent the past eight months addressing the impacts of the pandemic on the economy and has tried to put off a furlough for as long as possible.

“The pandemic has had harsh economic impacts on our country, and as a result, every state is having to make difficult choices,” Ige said. “Hawai‘i is among the hardest-hit states in terms of job loss and lower economic activity, because of the state’s reliance on tourism.”

The state has also issued $750 million in short-term bonds and the transfer of $345 million from the rainy-day reserve fund and $303 million from other funds to the general fund.

Additional measures include temporarily suspending pre-funding of post-employment benefits (state retiree health benefits) liabilities, saving $390 million; restricting 10% of the fiscal year 2021 discretionary portion of the budget; and the institution of a hiring freeze on 3,000 non-critical vacancies.

“I take this action with a heavy heart and I will rescind the furlough as soon as it is no longer needed,” Ige said.

The state did not provide metrics or a timeline to suggest when that would happen.

Unions respond

Four unions, the Hawai‘i Government Employees Association, the Hawai‘i State Teachers Association, the University of Hawai‘i Professional Assembly, and the United Public Workers issued a joint statement “in strong opposition” to the furloughs.

“These furloughs and planned budget cuts, announced just before the holidays, couldn’t come at a worse time,” the statement read. “Cutting pay for at least tens of thousands of government workers impacts their ability to meet financial obligations and spend in support of local businesses.”

That was a sentiment that HGEA Executive Director Randy Perreira shared Wednesday afternoon.

“I can express on behalf of everybody the disappointment and displeasure in the timing,” Perriera said.

Perriera said the union hadn’t received specifics on the furloughs and said Ige’s announcement was “misleading” with “very few facts and a lot of vagueness.”

“(Ige) is imposing a furlough that will save $300 million. On top of that, he is restricting spending in all state agencies by 10-20%,” Perreira said. “There will be the layoffs of employees because of that. I don’t see how you can cut that much out of each operating budget without impacting layoffs. He was very misleading.”

Perriera said the only proposal had been furloughed, with little negotiations with the unions.

“In fact, it will be furloughs plus layoffs and for him to suggest that furlough will mitigate layoffs is misleading.”

It’s a tragic situation, with many employees who have become the sole provider for their families as the hospitality industry continues to plummet. One study the statement cites found that every $1 reduction in state employees’ salaries results in a $1.50 reduction in overall economic activity throughout the state.

“Many of the people that are going to be furloughed come January 1 have spouses or significant others who have already lost their jobs,” Perriera said.

This story was updated Thursday, Dec. 10 at 11:26 a.m. to clarify that state employees will be furloughed two days per month.

  1. kauaiboy December 10, 2020 6:40 am Reply

    Governor Ige is proposing furloughs for all employees on the state educational system.Get used to it Hawaii. And get especially use to it, Kauai.

    No tourist dollars coming? No income for many businesses and more furloughs on the way, both at the State and County levels.

    “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,”

    Following closely behind will be Kauai County workers, as County income diminishes.

    “And it’s not just about workers’ pay and how their spending impacts our local economy; lost work hours during a prolonged furlough will negatively impact all public services provided by the government.”

    Local workers pay spending impacting our economy ? Try NO tourist spending impacting our economy!

    Get Kauai open NOW in the safest way possible, but stop keeping all the tourist dollars in their pockets or going to Maui, Oahu, and the Big Island.

    We are withering on the vine, not just struggling. We are dying from not from Covid but from the destruction of our main economic driver, the tourist industry.

  2. Colin McCleod December 10, 2020 8:13 am Reply

    “The pandemic has had harsh economic impacts on our country, and as a result, every state is having to make difficult choices,” Ige said.
    No, Ige, the political over reaction is what has caused the distress on working people. The politicians have not suffered the same loss of income as so many of those that are least able to weather the storm. And no, not all states have not followed the draconian model so they and their working people are in far better shape.
    Just what did you expect to happen when you and the mayors have essentially cancelled a good 40-50% of economic activity? That’s the problem with ill-considered panic driven one size fits all policies…you short-sighted types fail to consider the “unseen” consequences, then act surprised when they rear up and bite you on the hindquarters.
    Solution is targeted protective actions (elderly & other vulnerable with comorbidity) and release the choke-hold on the rest of us.
    Colin McCleod

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