Three weeks ago, Gov. David Ige said with the American Rescue Plan sending $1.6 billion in budget-bolstering assistance to Hawaii, the state would be afforded “much needed breathing room” — and that furloughs and layoffs of state workers would no longer be necessary to balance the operating budget.
But it’s now clear that in addition to the federal aid, funding cuts will be needed to fill the huge hole created largely by the pandemic’s economic fallout. The latest proposed squeeze: cutting hundreds of vacant government positions and taking hold of tens of millions of dollars tucked away in special funds that normally fall outside of the legislative process.
In many cases, eliminating vacant state positions seems sensible for necessary belt-tightening, with an eye toward meaningful reform for improving efficiency. Predictably, though, in response to state House leaders targeting some 800 jobs in their plan — mapped out in House Bill 200 — a long line of state agency leaders and others are urging lawmakers to take positions off the chopping block.
Such resistance is understandable, given that resources might be stretched thin in some departments due to demands linked to COVID-19, past position cuts and other reductions as well as the state’s current hiring freeze. However, the next few fiscal years cannot be approached as status quo. The state is climbing into a new normal that — for the foreseeable future — will not resemble a pre-COVID business-as-usual economy.
Shortly after the Legislature convened this year, House Speaker Scott Saiki delivered a speech that rightly underscored the need for restructuring and consolidating state government functions as Hawaii faces its most daunting financial crisis since statehood.
Saiki’s address came on the heels of a calendar year that wrapped up with Ige’s December announcement that he intended to impose two-days-per-month furloughs for up to 10,000 unionized state workers, thereby saving the state general fund about $300 million annually. While furloughs are now off the table, and public worker unions have asserted that terms must be negotiated before such a pay reduction is imposed, the pace of Hawaii’s economic recovery is uncertain. Should the current encouraging pace fall off, this budget-balancing tactic should not be ruled out.
Ige first raised the furloughs idea last April. Amid fierce resistance from unions, he later delayed his initial plan, opting instead — for the first time in state history — to borrow $750 million in general obligation short-term bonds to help cover payroll and other operating expenses. Thanks to the federal bailout money, House Finance Chairwoman Sylvia Luke has said enough cash is on hand to repay that debt.
The proposed budget version passed last week by the state House, meanwhile, seeks balance by saving some $76 million through elimination of the targeted jobs and tapping about $150 million from special funds with unspent balances, including $50 million dedicated to tobacco prevention.
Clearly, hard choices must be made — not just for today, but for future fiscal soundness — and the Legislature must proceed with care. Among the jobs that should be spared are those in which elimination likely means losing federal grant dollars.
Several years ago, the state House Finance Committee began experimenting with zero-based budgeting, a concept that forces government spending to be justified annually, rather than presumed. The strategy helps prioritize spending by starting the budget discussion at zero. Along those lines, Luke said the House has slated hundreds of vacant positions for elimination in past years, forcing departments to justify why they need them.
Sorting out the state budget’s want-to-haves from the need-to-haves — prioritizing basic vital services — is now more critical than ever.
