Budget solution requires creativity


POSTED: Saturday, July 04, 2009

A judge's rejection of Gov. Linda Lingle's “;unilateral”; attempt to order three-day-a-month furloughs of state employees for two years without pay in order to balance the budget should force her to look at other sources of revenue without raising taxes. She is not likely to find enough, forcing employees to accept reduced furloughs in negotiations that should meet the judge's requirement.

Circuit Judge Karl Sakamoto said at the conclusion of a court hearing last week that the state administration “;cannot implement changes on matters that are subject to mandatory bargaining”; without violating the state Constitution. Essentially, that means the administration must consider transferring funds to offset actions such as furloughs.

The unions have asked Lingle to use the $180 million in the Hurricane Relief Fund and the $45 million in the state rainy-day fund to limit wage cuts of employees. Those are logical sources.

Following Sakamoto's ruling, Lingle said that the administration “;will be continuing to identify additional savings from all state departments.”; The governor's stance is that the state faces an economic emergency, and the rainy-day fund seems especially appropriate.

Garrett Toguchi, chairman of the state Board of Education, renewed his call for dipping into the hurricane and rainy-day funds specifically for education. Tapping into those funds exclusively for education, however, would leave unions representing employees in the executive branch, the judiciary and the University of Hawaii system out in the cold.

The money available from such funds is nowhere near to being enough to eliminate the $730 million deficit—the unions maintain that is exaggerated—that the furloughs were aimed at cutting over the two-year period. Federal assistance may become available, but Lingle points out that the shortfall could grow when the Council of Revenues meets in September. Any negotiated agreement should account for such future increased deficits.

Unions also have called for increasing the state general excise tax, but that is not under the administration's control so cannot be included in labor negotiations. Nor should it be an option: The Legislature approved several tax increases during its regular session this year and should not add to rates that have made Hawaii one of the most heavily-taxed states in the country. Any further increase should infuriate the already overly-taxed public.

One of the ingredients of the state's collective-bargaining law sends unresolved issues to binding arbitration, and arbiters should be limited to consider existing and expected revenues under current taxes. The United Public Workers, the Hawaii State Teachers Association and the Hawaii Government Employees Association have said they do not object to some furlough days.

The only way binding arbitration will be avoided will be through mutual creativity and cooperation between labor and management.