Senate President Colleen Hanabusa isn’t the only one who is suggesting that Gov. Lingle appears to be inflating the state’s budget deficit.

Lawrence “Bill” Boyd, labor economist on the faculty of the University of Hawaii’s Center for Labor Education & Research, says the cuts being proposed by Gov. Lingle are 25% greater than required to meet the Council on Revenues forecast.

A Powerpoint presentation summarizing his arguments can be found on the CLEAR web site.

Boyd says Lingle’s furlough plan will contribute to the decline in Hawaii’s private sector economy because of the multiplier effects of public employee spending (or lack of spending). He projects the private sector will lose in the neighborhood of $516 million annually as a result of the furloughs, and state tax revenues will be cut $50 to $60 million because of resulting declines in income tax and GET.

In an email yesterday, Boyd wrote:

By concentrating these cuts in wages (and going beyond what is necessary) she has made this worse because her cuts will directly effect local resident’s disposable income. The cuts will have about a $1.1 billion dollar impact over the next two years. These effects will
happen in the private sector through a drop in consumption.

This will lead to a further reduction in tax revenues. Between $50 million and $60 million annually. These will come primarily from reductions in GET collections and income taxes. The majority will appear as private sector tax losses.

Boyd warns that, as in the Great Depression, policy choices based on political ideas can quickly make the situation worse.

It was the actions of those making policy that made the “Great Depression” “Great”.

And these actions were based on ideas.

Something like the actions of Linda Lingle.

Lingle remains single-mindedly focused on across-the-board furloughs despite growing evidence that this will cost the state more than it saves in many areas.

KHON reported this week that Department of Health nurses providing required care for “medically fragile children” in public schools will be furloughed, even though the state will then have to contract for private nurses to provide the necessary care.

Sources say those contractors cost more than the state staff.

The Department of Health told KHON2 the Department of Education will be asked to reimburse the health department for outside nurse expenses.

This appears to reflect the ideological rather than fiscal basis of the governor’s furlough plan, at least as proposed and currently being implemented.

Yesterday, University of Hawaii president David McClain reviewed the budget situation facing the UH system.

McClain on furloughs:

Tomorrow, Judge Sakamoto of the State Circuit Court will take up the question of whether furloughs can be implemented outside of the process of collective bargaining. If it is found that furloughs are an option we could employ, I believe, based on discussions with the chancellors and other university constituencies, that the most sensible use of this instrument would be during the winter break between semesters, the spring break and the Friday after Thanksgiving. Taken together, 13 furlough days would amount to a 5% reduction in compensation and—applied to those faculty and staff members paid with general or special funds, including our executives—would save the university more than $23 million per year. Such an approach would permit us to continue to deliver our educational services to our growing student population with minimal disruption of the academic calendar. Almost everyone I have consulted also recommended that the university system adopt a single approach to any furlough program rather than varying by campus or unit.

Though there are arguments on both sides of this issue, for a furlough plan of this magnitude (13 days per year), I would not support having those paid with federal funds—except our executives in that category—take a furlough. Researchers paid on “soft” funds are true entrepreneurs, assuming the risk that their grants will not be funded, and represent a powerful stimulative force in Hawai‘i’s economy. Indeed, in the fiscal year concluded June 30, UH scholars brought in more than $412 million in research and training grants and contracts, an increase of nearly 20%.

In addition, UH will now be closing many buildings on weekends, and whole campuses during the winter and spring breaks, shutting off electricity and locking out faculty and students. McClain also said savings will be made through attrition, leaving positions vacant, and suggested early retirement incentives may be proposed.

Meanwhile, in the face of all that stress, enjoy this photo taken early yesterday morning in Kaaawa. Yes, it was as calm as it looks. Perhaps it’s contagious.