Gov. David Ige’s latest financial plan reflects a somewhat cheerier economic outlook for state government going forward, but Ige is still pressuring the state’s public workers for concessions that would save the state about $285 million over the next two years.
Ige declined to say exactly what he has proposed during the ongoing negotiations with the public worker unions, but the Hawaii State Teachers Association notified its members this week the administration has proposed reductions in pay and benefits to save the state money.
Given the state’s current financial condition, “we can’t maintain employment of all employees at the current salary levels without seeing some significant labor savings,” Ige told reporters on Tuesday.
He bluntly ruled out any pay raises for public workers in the near future.
“As you know, we are not having the revenues that we can support pay raises at this point in time, and our proposals reflect the current financial status of the state budget,” he said.
Ige first proposed public worker furloughs last April, but then delayed imposing them. He later announced plans to impose twice-per-month furloughs on most bargaining units on Jan. 1, which would have amounted to a pay cut of about 9% for tens of thousands of state workers.
That would have saved about $300 million a year in payroll costs, but the plan for unpaid leaves was also delayed until after July 1. Then earlier this month Ige said that the two-day-per month furloughs would not be needed after all because tax collections are expected to pick up.
Now Ige speaks of “labor savings” instead of furloughs, suggesting the administration is open to other cost-cutting strategies.
When asked if he is inclined to simply impose public worker pay cuts, Ige said Tuesday his administration prefers furloughs over pay cuts because furloughs can be easily reversed by simply calling employees back to work when the economy improves.
The new financial plan Ige submitted to lawmakers this week spells out that the administration needs $146 million in “labor savings” in the fiscal year that begins July 1, and nearly $140 million the following year. Another $265 million in labor savings is planned for fiscal year 2024.
“There are many ways to get there, it can be pay cuts, it can be furloughs, it can be a combination of both,” Ige said. “Certainly we are flexible in our negotiating with the unions, but clearly we need to see labor savings right now based on the current revenue forecast that we have, and if no additional aid is provided from the federal government.”
Republican and Democratic governors and mayors nationwide have been urging the Congress for nearly a year now to fashion a relief package that includes cash to bail out financially strapped state and municipal governments that saw their tax collections collapse during the pandemic.
Ige said his new financial plan assumes that no additional aid will come from Congress, but promised to update his spending plan if that changes. President Joe Biden and the Congress are now negotiating over the size of the next federal pandemic aid package, and what will be included in it.
The Hawaii Government Employees Association on Tuesday declined to comment on Ige’s new financial plan because “there is still much that is a moving target,” including Biden’s plan for a new $1.9 trillion federal relief package.
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