State workers need to share budget burden


POSTED: Sunday, May 31, 2009

Gov. Linda Lingle is spending much of this weekend searching for ways to cope with state budget shortfalls that are greater than expected and probably will worsen. The Legislature approved tax increases that Lingle unsuccessfully opposed, leaving state employee furloughs and layoffs as the only sensible ways to balance the budget.

The governor plans tomorrow to unveil her strategy, which is likely to run afoul of the state's four public employee unions. She already has indicated that furloughs and layoffs will be necessary.

The state Council on Revenues expected at the beginning of this year that state revenues would drop by 3 percent from what had been forecast for the current fiscal year. That sank to a 5 percent deficit in March and plummeted on Thursday to 9 percent less than the initial projection.

Upon receiving the latest projection, Lingle said the 6 percent she had planned in budget restrictions will not cover the $185.6 million shortfall expected between now and the close of the fiscal year at the end of June. If the public employee unions reject the governor's call for a payroll reduction, as we expect, bargaining sessions will go to binding arbitration.

House Finance Chairman Marcus Oshiro and Senate Ways and Means Chairwoman Donna Mercado Kim have said it is up to Lingle to find ways to balance the budget, although Kim wistfully hinted at a hike of the state's general excise tax. That would require a special session of the Legislature, which would be unacceptable.

In this year's session, legislators approved increases in the hotel room tax on July 1 to 8.25 percent from the present 7.25 percent, an income tax increase for single taxpayers who make at least $150,000 and on couples with incomes of $300,000 or more, and increased conveyance taxes on real estate transactions, then overrode Lingle's veto for each. Lingle signed into law cigarette taxes that will go beyond increases that had been planned.

Raising taxes is not a popular strategy in dealing with a struggling economy, but states across the mainland are having little choice but to do so in order to abide by state constitutional budget-balancing requirements. All but a handful of states have been forced to deal with projected budget deficits, according to the National Conference of State Legislatures, and Hawaii is among those facing the largest deficits by percentage of what had been expected.

Some state employees have offered the warped explanation that their further wage increases—added on to generous raises in recent years—would serve as a stimulus to the state's economy. They need to accept the reality that the current recession extends to public as well as private employment.