Recommended: Tinfish Editor’s Blog, one of Susan Shultz’s creations. She’s a poet, a UH professor, Tinfish Press editor, and an activist on many levels.

Back on the budget.

Worth noting–some points made in a Pacific Business News editorial regarding the importance of government to Hawaii’s economy, which drew from an earlier PBN story. Do I have to say directly that I really value my PBN subscription and recently extended it for another three years?

• “Government accounted for 24 percent of Hawaii’s gross domestic product in 2008, up from 22 percent in 1998.”

• “And federal, state and local government still employs more people than any other business, nearly 125,000 people or about 21 percent of the state’s workforce.”

• But even as the bureaucracy has expanded, the percentage of the Hawaii workforce employed by government hasn’t. It hovered at about 21 percent in 1959, the same as today.

So although government functions have expanded cost more to carry out today, the workforce hasn’t expanded proportionally in comparison to the overall workforce.

Here’s where I think Lingle’s 36-days per year furlough plan is short sighted, although as I mentioned yesterday, I wish someone should show us the data.

Lingle’s plan essentially takes a huge cut out of the salaries of the largest segment of the workforce, reducing or eliminating their discretionary income, with impacts necessarily trickling down, or flowing into the rest of the economy.

My guess is that these impacts will exceed the negative economic impact of a temporary boost to the state’s general excise tax, which is considered a very broad-based and “efficient” tax.

Unfortunately, Lingle has said that she wants that deep cut furloughs even in cases where they will cost the state money because we will be required to contract for the services that the furloughed state workers won’t be providing. It sounds nuts, but that’s the plan, at least according to published accounts.

I received the following extended and very thoughtful comment from a friend who, as usual, makes a lot of sense.

I was reading your blog about the furlough dispute between Lingle, on the one hand, and the dems/unions on the other and thought I would toss off some stray thoughts to you.

I have been confused about this issue for some time. Sadly, I have seen virtually no analysis of the positions of the respective parties, but I am quite certain that many of the actors in the state government have multiple theories. I bet that there is rampant informed discussion among state employees on the motives and real issues. Thus, I applaud your “cynical” correspondent; he may have his finger on something or at least the beginning of something.

I finally decided that there are a number of competing considerations going on, possibly including those below.

(1) Lingle may want furloughs because she may not want to make difficult admin decisions about terminating entire programs (which might otherwise be necessary); a furlough “spreads” the pain across the state government as a whole and there is no need to choose among “needed” vs “more needed” programs for serious cuts. Choosing to terminate or differentially impair a particular program probably results in greater political fall-out than a general approach like the one she proposes.

(2) A furlough may result in a greater monetary saving per employee: if you furlough all, you pick up the high-wage upper echelons of the government; if you do a layoff, the union contracts probably require that it be done first to the last hired, that is, generally folks who are making less. If you think that higher wage employees are doing the “same” work as lower wage employees, a constant dollar amount “saved” via a furlough will result in less impairment to State functions than an equivalent dollar amount saved via layoffs. (A furlough may also have the benefit that your other correspondent pointed out: it hurts higher level employees and protects lower level employees. Higher level employees may in fact be more favorably inclined to the Democratic party than the more recent hires.)

(3) Lingle may have some notion that a furlough will cut down future expenditures necessary for the State’s retirement obligations. I recall (perhaps erroneously) that civil servants get to do some variant of a high three retirement, that is, they get a retirement stipend that is some percentage of a “base” of their highest paying three years. For those within three years of retirement today, a furlough will reduce the money that they “need” to pump up their retirement base. Rationally, the State, as payor (although not necessarily any particular politician), may want to reduce these expenditures, while of course, the employee, as payee, (and the union) will not want such a result.

(4) Lingle may be angling for a broader political payoff. If she can convince the public that the unions are being unreasonable, or that they are intent on helping upper echelon employees at the expense of the lower, she will “win” the public relations game. (So far, it looks like a toss-up to me; the situation is so confused that the public has not made a decision.)

The unions and the Democratic party probably have some variant of these motives. Democratic politicos do not seem to be rushing to propose either cuts or tax increases. Everybody wants the other guy to take the heat from proposals that the public is not going to like. (Who likes hearing that the State is poorer and we either need to reach into our jeans for more cash or accept fewer services?)

The real problem, however, is that we are on our way to a California-style political gridlock: liberals want to resolve the issues by raising taxes; conservatives want to choke off government spending. Both want to win the public relations game and neither is too interested in compromise.

I think that’s more than enough for this Friday morning.

Mr. Duke doesn’t seem too concerned about the state’s budget situation. Food, sun, catnip, happy! He’s just one of this Friday’s felines. Just click on his photo for more.