Revenue drop heightens Lingle's call for labor cuts


POSTED: Thursday, July 09, 2009

In her most somber assessment of the economy yet, Gov. Linda Lingle says tax revenues continue to plummet, meaning the state has to cut an additional $57 million in spending.

Lingle yesterday released new tax collection figures that show a drop even worse than the 9 percent decline estimated last month by the Council on Revenues.

The final figures show Hawaii actually lost an extra $56.7 million, which Lingle estimates puts the budget shortfall at $786 million through June 30, 2011. The previous shortfall was estimated at $729 million.

“;It is important to recognize that we will not be the same government when we come out of this process,”; Lingle said in remarks to reporters at the state Capitol. “;We have billions of dollars less money. We can't possibly look the same or act the same.”;

In a shot aimed at the stalled labor talks between her office and the four public worker unions, Lingle said everyone has to note the changes.

“;The world has changed. We need to respond to it. There are some people who cannot yet accept that the world has changed dramatically over the past year and everyone has to accept that,”; Lingle said.

Meanwhile, the Hawaii Government Employees Association is posing a question on its Web page, asking members what they would think of a 5 percent pay cut, or a one-day-a-month furlough.

“;HGEA is prepared to propose an offer to the employers. The legislators, governor, lieutenant governor, department heads, mayors and their Cabinet members have taken a 5 percent reduction in pay. HGEA negotiating teams are in agreement that a 5 percent reduction in pay for bargaining unit employees in all jurisdictions is a fair offer,”; the union said.

The governor said later yesterday that the additional revenue loss show financial problems ahead. For instance, Lingle said estimated taxes dropped 40 percent.

“;This is an indicator that Hawaii residents are projecting their current and future income to be significantly less,”; Lingle said.

Lingle said the budget shortfall will translate into state workers losing their jobs through mass layoffs.

;[Preview]  State deficit higher than predicted

The governor said the state budget shortfall has increased to roughly $900 million, that means layoffs and furloughs may need to be drastically higher than originally predicted.

Watch ]


The process for laying off public employees is complicated and long.

“;I have concluded my talks on layoff issues with the (state) department heads and it is likely by the end of the week we will have a letter to the unions with a list of who would be included in the layoffs,”; Lingle said.

For workers represented by United Public Workers union and HGEA, the layoffs would take at least three months. It would take various periods of time, up to one year, before members of the Hawaii State Teachers Association and University of Hawaii Professional Assembly could be dismissed.

Lingle told reporters: “;I await a serious proposal from the unions. It would have to be something on the record ... it has to be something that takes into consideration that we have not yet bottomed out.”;

Lingle would not specify how many workers would be laid off, but initially she indicated there might be 2,500 layoffs.

On Monday Lingle's collective bargaining representative, Marie Laderta, human resources director, walked out of talks because there was no formal proposal offered by the unions to the state.

Talked are stymied because although the mayors, the hospitals and the state's upper and lower education departments are part of the bargaining process, no group can approve a contract without the governor's approval, according to state law.

Lingle also criticized the four mayors, saying they are playing up to the unions because “;they have no skin in the game,”; meaning the county budgets have already been passed for this year.

“;They are able to sit on the sidelines and be a good guy with the unions and say: 'We don't need furloughs. We don't need to cut back on the health costs,”; Lingle said.

But the former two-term Maui mayor warned that property taxes are likely to decline next year at the same time the Legislature is likely to drop county aid.