Hawaii faces a “fiscal emergency"

Lingle orders unpaid days off for workers

Saying Hawaii faces a “fiscal emergency that is unprecedented in size and scope,” Gov. Linda Lingle on Monday ordered all state workers to take three unpaid days off per month.

In an address broadcast from the State Capitol, Lingle also said she would scale back free Medicaid benefits to low-income adults and said the state would delay paying some of its larger bills until July.

The governor is also asking the Judiciary, the Legislature, and the Office of Hawaiian Affairs to implement equivalent furlough days or restrict their budgets.

Hawaii law does not allow ordering furloughs for the Department of Education, the University of Hawaii or the Hawaii Health Systems Corporation, but Lingle said their spending will be restricted in an amount equivalent to the three-days-per-month furlough.

The furloughs, which start July 1, amount to about a 13.8 percent pay cut, or about $5,500 for a worker making $40,000 a year.

As with layoffs, Lingle does not have to negotiate the furloughs with any of the unions representing state workers. Lingle has said she doesn’t want to lay off workers because of the disruptive effect of contract rules that would enable senior workers to “bump” junior workers, even if they worked in different state agencies.

The furloughs will save $688 million. Lingle said the savings are needed to close a gap of $730 million between now and June 30, 2011, as forecast by the state’s Council on Revenues May 28.

All told, Hawaii is expected to see tax revenue fall by $2.7 billion over the next two years.

“If we do not implement the furlough plan, we would have to lay off up to 10,000 employees to realize an equivalent amount of savings,” Lingle said. The state has about 74,000 workers.

Lingle blamed the fiscal shortfall on the lingering recession, rising unemployment, dropping visitor arrivals, a decline in private building permits, a doubling of foreclosures, and record bankruptcy levels.

The state Legislature ended its session last month by raising tax rates on hotel rooms, high-income earners, luxury home transactions and tobacco to help meet the budget shortfall.

But Lingle, a Republican whose vetoes of those measures were overridden by majority Democrats, said she would not ask for additional tax increases. She also rejected calls for legalizing gambling.

However, Lingle noted that 70 percent of state operating funds go to labor costs and that the state had provided employee wage increase of between 16 and 29 percent over the past four years “when our economy was thriving.”