Ige considering pay cuts as state faces $1.5 billion shortfall because of pandemic

  • IGE

Pay cuts for state employees are on the table, but increases in state general excise or personal income taxes are not at this time, Gov. David Ige said during a press conference Wednesday afternoon.

Ige said the state is projecting a $1.5 billion shortfall during the next 15 months because of losses in hotel and restaurant revenue caused by the coronavirus pandemic. With the state shut down, transient accommodations taxes and general excise taxes — which account for the bulk of the state’s revenue — dropped significantly.

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“The revenue stream that the state counts on is severely impacted and we will have to take drastic actions,” Ige said, noting that 100 hotels throughout the state are completely shuttered. “Certainly, our employees are important assets and that would be a last resort.”

Pay cuts or possibly furloughs for state employees have the state’s public sector unions concerned, and one of the largest, the Hawaii State Teachers Association, representing 14,000 teachers statewide, had a press conference earlier Wednesday to raise the alarm.

Ige met with union representatives for the six unions late Tuesday, advising them about the possible action that could include 20% pay cuts for all except first responders and nurses, who would see 10% cuts. Nothing has yet come out in writing. State workers’ salaries and benefits account for 80% of the state budget.

“No decision has been made on pay cuts at this point in time. We have consulted with the unions,” Ige said. “We continue to work with the Legislature and the unions. … We had discussions looking at different scenarios. … We didn’t want to blindside anyone.”

Ige said he and his Cabinet would also take 20% pay cuts if that option is exercised with the union employees.

The proposal is premature, said HSTA President Corey Rosenlee, because the state doesn’t yet know the full amount of federal stimulus money that will be available and it has more than $1 billion in rainy day and budget carryover money to tide it over until it does.

Rosenlee said the state is still woefully short of teachers.

While the average salary is $65,000 and teachers have been getting regular raises, a beginning teacher makes much less and many take second or even third jobs to survive. A “brand new” teacher taking a 20% pay cut would end up with $850 every two weeks, he said.

“We’re just asking we let the dust settle before he takes this action,” Rosenlee said. “I am terrified what this is going to do to our teaching force. … There may be no person to walk into that room to have a classroom at all.”

Legislative leaders acknowledged Ige’s authority to cut pay under an emergency proclamation, but said they hoped it wouldn’t come to that.

“Although Gov. Ige has the unilateral authority to impose furloughs and salary cuts, we do not agree with such action. We urge the governor to obtain better data and analysis before he makes this decision,” said Senate President Ron Kouchi and House Speaker Scott Saiki in a joint statement.

Kouchi and Saiki urged Ige to act on other alternatives such as calling on Congress to release more money to help states shore up their budgets.

“Although we disagree with Gov. Ige’s proposal, the Legislature will work with him to assess and pursue all options,” the legislative leaders said.

Ige said federal stimulus money received to date can’t be used to pay for existing programs or salaries, under the rules.

Of the $1.25 billion local government money Hawaii gets under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, $387.18 million goes directly to the City and County of Honolulu, while the state gets $862.8 million, of which it’s supposed to share 45% of that amount with the local governments smaller than 500,000 population.

Ige said the $400 million rainy day fund requires legislative action to use, and can’t go toward pay raises.

Members of the public watching the state’s press conference on Facebook Live were largely opposed to pay cuts for state employees.

“Don’t understand why are u giving these poor ppl pay cuts when they are already going through hell now u wanna cut their pay,” said Leilani Angel of Keaau, adding a couple forehead slap emojis to her comment. “too much I tell you.”

Josh Taylor, of Laie, Oahu, was more practical about it. He said getting the state up and running again will go a long way to solving the problem.

“Where does tax money come from? Businesses and people. Many businesses and people are not working, thus not making money, therefore not paying taxes. No tax, no money for the government workers, including government employed teachers,” Taylor said in his post. “The faster we get these mandates lifted the faster you can go back to trying to take more of your neighbors money for your tax funded raises.”

Three Hawaii teachers joined the HSTA press conference to share their stories.

Jennie Hancock, who’s taught fifth grade at Waikoloa Elementary and Middle School for seven years, is married to another teacher. She said a 20% pay cut would have them calling their parents on the mainland to see if they could move back home.

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“That’s the reality we’re facing: evacuation in the middle of a pandemic,” she said, “since we already live paycheck to paycheck.”

Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.

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