HONOLULU — Hawaii state worker unions on Wednesday pushed back at what they said was a proposal from Gov. David Ige to cut employee pay by 20% to cope with a sharp drop in tax revenue brought on by the coronavirus pandemic.
Ige said at a news conference he was in discussions with unions and lawmakers about potential cuts but no decision has been made. He said the tax shortfalls meant the state needed to cut $1.5 billion from the state budget over the next 15 months.
He noted the state has essentially shut down the tourism industry to slow the spread of the virus, which has hammered two major sources of state income: the hotel tax and the general excise tax.
“There are more than 100 hotels across the state that are completely shut down, meaning we are getting zero income from those properties,” Ige said at a news conference that was streamed online.
He said tax increases weren’t under consideration “at this point in time.” The governor said he and members of his cabinet would take a similar pay cut to any taken by employees.
Hawaii State Teachers Association President Corey Rosenlee told his fellow union members in an emailed message Tuesday night that it was unclear if the governor intended to implement the cuts as furloughs or as across-the board salary decreases. The reductions could come as early as May 1, he said.
He said the proposal was unacceptable.
“While we recognize the coronavirus has already started to cripple Hawaii’s economy, no one can be sure of its long-term impacts. We believe cutting salaries for tens of thousands of state workers is rash and will hurt our state even more,” Rosenlee said in his letter.
The union represents 13,700 public school teachers statewide.
Teachers like Jennie Hancock, a 5th grade teacher at Waikoloa Elementary School, said her family already lives paycheck-to-paycheck. She said it would not be possible for her and her husband, a fellow state worker, to continue to live in Hawaii with these cuts. She said they have asked their mothers if they could move back in.
“That’s the reality we are facing: evacuation in the middle of a pandemic,” she told a video news conference organized by the union.
The Hawaii Government Employees Association, which represents 40,000 state and county employees, objected to cuts, especially when workers are on the front lines in the fight against the virus.
“Needless to say, any immediate furlough or salary reduction for government employees would only result in a greater strain on our local economy via unmet mortgage obligations, failure to make rent payments and a general inability to spend money to support local businesses,” Randy Perreira, the union’s executive director, said in a letter to Ige.
Senate President Ron Kouchi and House Speaker Scott Saiki issued a joint statement opposing a 20% cut. They urged him to obtain better data and analysis before he makes such a decision.
“Although we disagree with Governor Ige’s proposal, the Legislature will work with him to assess and pursue all options,” the statement said.
Both unions urged the governor to find money elsewhere.
Rosenlee said Hawaii had a cash surplus and a rainy day fund totaling more than $1 billion at the end of the last fiscal year. He noted Congress appropriated stimulus funding for the state and counties.
But Ige said federal law explicitly forbids the state from using the more than $800 million it received in stimulus money on existing employees or programs. The funds may not replace revenues lost as a result of the virus, he said.
Perreira said Hawaii was sitting on “hundreds of millions of dollars” that could be used to shore up the state budget. He also suggested the state temporarily forgo payments into the Employees Retirement System, which he estimated amounts to $1 billion a year.
Ige said money in the state’s so-called “rainy day fund” may not be spent unless its appropriated by the Legislature. As for forgoing payments to the retirement system, Ige said that would be an option.
As of Wednesday, the state has recorded 530 cases of the disease, including 13 newly reported in the past 24 hours. Nine people have died.
