State furloughs preferable to layoffs


POSTED: Wednesday, June 03, 2009

More than a dozen states are in various stages of forcing their employees to take furloughs — workdays off without pay — to achieve state constitutionally-required balanced budgets. Gov. Linda Lingle's requirement that Hawaii's state employees take three days off each month over the next two fiscal years will be the most severe and will be unquestionably painful — but it still is preferable to layoffs.

Several states have required their employees to take up to two days off each month to cope with budget shortfalls, according to the National Conference of State Legislatures. However, some of those, including California, have combined furloughs with layoffs, which is a drastic action that Hawaii should avoid unless forced by legal challenges to do so.

Furloughs also have been used in the private sector to avoid bankruptcy. A Watson Wyatt survey in April found that 17 percent of 141 companies surveyed had imposed furloughs in that month, up from 11 percent in February. Twenty percent of the 518 businesses surveyed in April by Hewitt Associates had implemented involuntary furloughs.

Lingle's decision will directly affect the 14,500 state employees under her direct supervision. In addition, she said she will subtract the equivalent of furloughs in dollars distributed to the Judiciary, the University of Hawaii and the Department of Education. If the Lingle formula is applied, the nearly 32,000 employees in those branches of the state government would face three furlough days monthly.

House Speaker Calvin Say and Senate President Colleen Hanabusa, a lawyer, question whether Lingle has the authority to initiate furloughs. Hawaii's book of laws does not mention furloughs, and Deputy Attorney General James Halvorson advised Say in February that a lawsuit would be “;probable”; by one or more of the public-employee unions challenging any decision by Lingle to impose furloughs.

That may seem encouraging to the union members. It should not. The word “;layoff”; does appear in a statute that clearly empowers the governor to “;release employees due to lack of work, lack of funds or other legitimate reasons,”; and, as Halvorson noted, “;without having to negotiate such a decision.”;

If layoffs instead of furloughs were to be ordered throughout state government, as many as 10,000 of the employees would lose their jobs in order for the budget to balance, Lingle said. Although the furloughs will result in severe wage cuts, pay increases that ranged from 16 percent to 29 percent in the past four years should enable many to meet their financial needs.

In the case of either furloughs or layoffs, both state employees and those whom they serve will struggle. During hard economic times, government services grow in demand, which means that fewer state workers will handle a larger load.

Although the unions want more tax increases to avert furloughs, legislative leaders appear less than eager to call a special session to do so, however beholden they have been to the unions. The issue will be whether the unions can orchestrate tax increases in the next regular session in 2010, despite the damage they would cause to the state's economy.