Tag Archives: state budget

Thursday…Key legislators say Lingle creating an artificial budget crisis

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A group of well-placed and well-informed political insiders at the State Capitol have reached a disturbing conclusion about Governor Linda Lingle’s approach to the state’s fiscal problems.

“The bottom line is that they’ve created this artificial crisis, there are other ways to manage it, and if the governor would get off her high horse and stop saying it’s got to be her way or the highway, then there are ways some of these things could be adjusted and accommodated,” one explained.

During a wide-open “not for attribution” discussion earlier this week at the capitol, several legislators with in-depth knowledge of varied program areas shared their frustration and a blunt assessment of the governor’s policies.

FurloughThey fear the governor is creating an artificial emergency by taking ill-considered actions that will cause, rather than solve, further fiscal problems.

They point first to the administration’s failure to quickly take advantage of federal stimulus money and other anticipated sources of immediate financial relief.

According to data gathered at Recovery.gov, Hawaii will be able to eventually draw on nearly $1.4 billion in federal stimulus grants, with $699 million already made available. Of that amount, the state has drawn only $232 million to date.

“Clearly, if the federal funds are appropriated, and if we’re having a shortfall during a certain period of time, it would be logical to try and fill in with federal funds that we know are allocated to Hawaii to even out those dips,” one said.

“We’re way up the food chain in the dollars allocated, but we’re low on the amount of funds actually drawn and spent,” another observed.

The hearing of the U.S. Senate Appropriations Committee in Honolulu next week, chaired by Hawaii Senator Dan Inouye, is believed to reflect frustration over the state’s tardiness in taking advantage of the federal funds made available so far.

Further, these legislative insiders say, the available federal funds do not appear to have been factored into the state’s financial plans.

A recent presentation by Lingle administration officials to the House Finance and Senate Ways and Means committees “did not cover any of the stimulus money”, instead presented only a general fund plan.

“They may have a financial plan, but it is an incomplete financial plan”, one complained.

Then there are anticipated retirement savings, which have not yet been taken into account by the state. Some sources we could see four times the normal number of retirements, with 4,000 to 4,200 public workers choosing to step down over the next year.

Several factors are said to be at work. There’s frustration over the current uncertainty, stress, and poor working conditions, as well as a desire to “lock in” benefits such as health care now rather than risk potential future cuts in benefits. In addition, threatened furloughs and salary cuts would reduce the incremental advantage of additional years of employment in calculating retirement income.

But there is also a major change in the retirement system that rolls out in October. Under this plan, approved by the legislature several years ago, an estimated 24,000 state and county workers will be eligible to switch back to the higher level of benefits offered by the old contributory retirement plan by buying back prior years of service with a lump-sum payment to the retirement system. They could then retire and receive the higher benefits of the contributory plan, and many are expected to do so. Information packets spelling out the new option are scheduled to be mailed in October, according to the Employees Retirement System newsletter.

There has already been a surge of retirements during the first six months of 2009, and the projected retirement numbers signal huge savings ahead.

“Even if you assume the bulk of those retirements are DOE and UH types that you have to replace, just the disparity in the salaries would end up saving a huge amount of money,” one said.

“When questions were asked during the joint House-Senate briefing, Budget Director Georgina Kawamura had no response,” one participant in our discussion explained. “They said they had not begun to calculate what this level of retirements might mean.”

And that’s not the only thing that hasn’t been thought through, according to these legislators.

“When you talk to people inside the departments, they tell you they have not thought about what it means to close down an entire program, what it means to close down an entire division. They have no clue what do they do with the records and the equipment and all that stuff,” one said.

“They are not thinking beyond the end of their nose, that’s just real clear when you talk to people.

Tomorrow: On the chopping block–The apparent political agenda behind Lingle’s budget moves

Thursday…Kaaawa gets attention, UH on path to retrenchment, and more Morning Dogs

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Kaaawa was featured in a KITV weather report yesterday as the remains of the former hurricane, Felicia, slipped past the island.

And the Advertiser reports that Kamehameha Highway, our two-lane access to Kaaawa, was closed for five hours overnight when Waikane Stream overflowed.

Police reported about 3 feet of water on the highway after heavy rains fell throughout the evening. Officers began turning cars around at about 11:10 p.m.

The road was reopened shortly before 4 this morning. There were no reports of property damage or injuries, police said.

On K-5’s news at 9 p.m., a map purporting to show the location of Kahana Bay had it sitting about in Kaaawa, while the obvious bay sat off to the left of the marked location. Who checks these things?

Up at UH-Manoa, Chancellor Virginia Hinshaw sent out an email at 5:01 p.m. yesterday announcing plans to move towards closing programs and laying off faculty and staff, potentially including tenured members of the faculty, a process referred to as “retrenchment”.

It is a process that is likely to cause severe damage to our system of higher education, which in turn will undoubtedly reverberate further through the economy.

Several things come to mind. First, the Board of Regents and UH senior administrators have failed in their responsibilities to publicly advocate for the university system. They simply haven’t conveyed to the public the fragile nature of this system of higher education and the long-term consequences of dramatic short-term actions. Neither have they marshaled the university’s intellectual resources in this effort, demonstrating a lack of leadership.

Second, there’s a huge elephant in the room no one wants to talk about, and that is the continued development of a large new West Oahu campus.

While Hinshaw believes the university “cannot afford to continue all that we are doing”, the financial drain of building, staffing, and maintaining a whole new campus will further weaken the rest of the university system.

There is little question that there simply is no educational need for a new West Oahu campus of the size being planned. And it’s no secret that university administrators, while publicly clinging to the official line, have privately lobbied against further funding of West Oahu.

With the prospects of cuts that will diminish the stature of the University of Hawaii for years, perhaps decades, it’s time for those concerned about its future to stand up to the landowners and developers and, yes, politicians who want to profit even at the expense of the university as a whole.

And that reminds me–all those folks who pushed so hard to retain the Act 221 tax credits need to take a hard look and see that their interests are directly involved here. With a scaled back and damaged university system, their high tech hopes cannot be sustained. Under those circumstances, why should the public continue to pour resources into the pockets of investors while at the same time defunding the intellectual and educational infrastructure necessary to sustaining an expansion of the technology sector?

In any case, venting aside, it’s also worth taking a look at the retrenchment provisions of the UH faculty contract.

Although Hinshaw’s email announcement said layoff notices will go out as early as September 1, it looks like that deadline can’t be met, at least regarding positions subject to the retrenchment process because proper notification of the union and a required 45 day waiting period.

When the Board of Regents determines that retrenchment may occur, it will so inform the Union and will provide whatever information that is available, including a list of Faculty Members expected to be retrenched, and a list of vacancies for which active recruitment is occurring throughout the UH System. The Union may submit its assessment and/or recommendation within thirty (30) days of such notification. The Board of Regents will not proceed with its retrenchment action until forty-five (45) days after its notification to the Union.

And “bumping rights” apply to faculty as well according to the contract.

A tenured Faculty Member who is retrenched according to the provisions of this Article shall have employment rights to any position within the locus of tenure for which the Faculty Member is qualified and which is occupied by the Faculty Member with the least seniority, provided that the provisions of this paragraph shall not be applicable to the Faculty Member who is displaced.

“Locus of tenure” typically does not refer to the specific department or program in which a faculty member teaches, but to the college, a much larger unit, meaning that the process is going to be much more difficult than it appears.

And much of this pain is triggered by the Lingle administration’s ideologically-driven refusal to seek additional revenues and instead go the Herbert Hoover route.

HokuWith all that going on, I’ll end with an upbeat look at more of our Kaaawa morning dogs. This is Ms. Hoku, age 10. She’s been part of our morning walks her whole life, although at first she just begged to be petted and only later discovered the joys of the dog biscuit.

So click on Hoku’s photo for more dogs.

Friday…Tinfish Press blog, more budget talk, and Friday’s Felines

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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.

DukeMr. 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.

Thursday…HI-5 by “Eating in Public”, Layoffs have started, convening a special session, missing numbers, and more dogs for this morning

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[text]Perhaps you’ve seen one of these signs next to a small wire bin. They’re appearing around the island. I saw this one on the lawn in front of the State Library at the corner of King and Punchbowl. We pass one every afternoon at the bus stop across from the Hygienic Store in Kahaluu.

They are part of Eating in Public (www.nomoola.com), and have their own blog.

It’s all part of a larger project by UH professors Gaye Chan and Nandita Sharma. Interesting, fun, and thought provoking.

From the Star-Bulletin’s report today on the latest round of the budget battle:

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.

As I noted here a couple of days ago, University of Hawaii Manoa Chancellor Virginia Hinshaw issued a statement last week which included this comment:

Unfortunately, these reductions have resulted in approximately 150 members of our faculty and staff not being renewed for their positions at this time.

It looks to me like she’s saying, in essence, that there have already been 150 layoffs on the Manoa campus. This is consistent with an earlier report that some staff had been terminated.

So why haven’t mainstream news reports recognized that layoffs have already begun?

I also noticed House Speaker Calvin Say’s comment quoted in today’s Advertiser:

State House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo Valley, Wilhelmina Rise), said Lingle has options beyond resorting to layoffs. He said Lingle could impose spending restrictions, call lawmakers back into special session if she believes there needs to be an immediate response on the budget, or wait until the next session in January and work with lawmakers on a solution.

“At this point, there is no urgency,” Say said. “There is a deficit and she has to go through what her administrative responsibilities are. She can implement more restrictions. She can implement whatever she has to do financially, or she could make a request for a special session to call us back. But she has to have her proposals in hand.“

This again highlights the legislature’s unhappiness at Lingle’s failure to actually submit a fully formed budget proposal during this past session, which forced lawmakers to fill in the gaps. It’s not the way the system is designed to work, and certainly not the way the legislature prefers (or is structured to) act.

Lingle talked about a balanced budget but never actually submitted one will all the blanks filled in. Now she seems to be doing the same thing with contract talks, pressing the unions to come up with a solution on their side.

Meanwhile, the legislature doesn’t have to wait for the governor to call them back for a special session. Here’s what the State Constitution has to say (Article III, Section 10):

At the written request of two-thirds of the members to which each house is entitled, the presiding officers of both houses shall convene the legislature in special session. At the written request of two-thirds of the members of the senate, the president of the senate shall convene the senate in special session for the purpose of carrying out its responsibility established by Section 3 of Article VI. The governor may convene both houses or the senate alone in special session.

One reader shared a very cynical interpretation of Lingle’s preference for furloughs over layoffs, suggesting that layoffs will take a bigger bite out of Lingle’s past patronage, since those in appointed positions (no union or civil service protections) and those with less seniority (hired during Lingle’s term) are most vulnerable to layoffs.

It seems to me that by this time, economists could have applied their computer models to the different alternative approaches to the needed budget cuts, comparing the costs of Lingle’s extreme 3-days per month furlough plan, her layoff scheme, various tax increases, and various mixtures. Furloughs will take a big bite out of the consuming middle class, which will reverberate through the economy. Tax increases are, well, less than popular. But the immediate and longer term impacts can be predicted.

So far, I haven’t seen such an analysis, although hopefully someone can point me in the right direction.

dogsAnd here are a few more Kaaawa dogs. I’m working through my backlog of dog photos after noticing that I hadn’t done a real dog gallery in a couple of months. Cats have their regular Fridays, while dogs tend to get pushed aside by other news.

Anyway, this is Ms. Pili, who was initially quite shy but has become a fan of our morning routine. Just click for more.