State looks atHawaii's state leaders are struggling to deal with a plunge in state revenues so serious that they are talking about laying off workers, cutting expenses by 5 percent or withholding next year's public worker pay raises.
Hawaii leaders are also considering
withholding public worker pay raises
to deal with a projected
drop in state revenue
By Richard Borreca and Pat Omandam
No one is formally pushing those ideas, but Gov. Ben Cayetano said yesterday they are all items to review.
Cayetano also said he was considering calling a fourth special legislative session to give him the power to furlough instead of dismiss state workers.
"In lieu of layoffs, I'd rather furlough people so I can get them back again, and I can't do that without a new law," Cayetano said.
But by the end of the day, Cayetano said he was also thinking that it might not be needed immediately because the Legislature's regular session starts Jan. 16.
Senate President Robert Bunda and House Speaker Calvin Say agreed there is no need for a special session.
"It's too premature to even think about another special session," Bunda said. He added that furloughing workers is not a consideration at this time.
Bunda suggested looking into various projects and funds "to see if our community is ready to utilize money that is laying around to go towards helping our economic situation."
Say suggested taking a look at the budget to see where cuts can be made to offset the expected $158 million drop in state tax revenues.
If the state Legislature is unable to come up with cuts during the regular session, furloughing workers will be considered, he said.
The state's largest public employee union, the Hawaii Government Employees Association, did not outright reject the suggestion of furloughs or pay raise delays, but said any decisions should be reached through collective bargaining.
Randy Perreira, HGEA deputy executive director, said the state should negotiate those issues and not try to enact them without any discussion.
The latest economic concerns were prompted by the Council on Revenue's decision Wednesday to lower the estimated state growth rate this year to minus 0.7 percent from 4.1 percent.
Cayetano called the state's economic situation "serious" and said the state needs "sane, serious, sober and realistic proposals."
Cayetano was reacting to calls from state Republicans to go back into special session to pass a new round of tax breaks.
House Minority Leader Galen Fox said the state cannot wait until the start of the regular session in January to deal with this emergency.
"The other shoe has dropped," Fox said. "The statistics are daunting. Visitor arrivals from Japan are down 55 percent from a year ago. Hotel occupancy rate is under 60 percent. Tourist-related shops and businesses are closing down. We have to encourage consumer spending."
House Republicans continue to push proposals that have failed in past legislative sessions, such as a retail sales tax holiday and temporary exemption from the state food tax. They say these tax cuts would put more money into the hands of consumers, who in turn will spend more.
"It's our duty to keep bringing up the ideas that we know will work until this state decides to finally try it," said Makakilo Republican Mark Moses.
Cayetano rejected both GOP suggestions, calling a food tax cut "pure politics" and saying the state could not afford the lost revenues from a retail tax holiday.
Meanwhile, U.S. Rep. Neil Abercrombie (D-Honolulu) told a congressional committee yesterday a retail tax holiday is needed in Hawaii to stimulate holiday sales. He is co-sponsoring federal legislation that encourages states to suspend collection of sales taxes during an 11-day holiday shopping period, with the government providing a one-time reimbursement to states and counties for lost revenues.
Star-Bulletin reporter Rosemarie Bernardo contributed to this report.
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