Hawaii State Teachers Association President Corey Rosenlee urged Gov. David Ige to maintain and not reduce the salaries of state government employees, including educators, during the pandemic, offering a list of logical alternatives to pay cuts.
Other Hawaii and national union leaders have written Ige similar requests this week, proposing a range of more than 15 budgetary options that would be less harmful to Hawaii’s economy and its citizens than cutting take-home pay.
“Similar proposed cuts have not been announced by any other governor in the country and would only worsen this crisis,” Rosenlee wrote in a letter to Ige Wednesday about the governor’s potential plans to reduce the pay of educators and most other state employees by 20 percent because of the coronavirus. “Instead, those governors are calling on Congress to support states as they struggle with revenue problems.”
Rosenlee cited the University of Hawaii Economic Research Organization (UHERO), which recently said, “We cannot overstate the tremendous adverse impact that a sharp contraction in government spending will have on the Hawaii economy, and the corresponding positive effects that sustaining public spending will confer.” UHERO economists found that cutting salaries by 20-percent would have a multiplier effect that would “lead to a drop in GDP of $3.3 billion over the 2020-2022 period.”
Rosenlee urged the governor to consider the following options:
- Follow UHERO's recommendations to borrow up to $3 billion from the Federal Reserve’s Municipal Liquidity Facility;
- Wait for the federal government's next stimulus funding supported by President Trump and Democratic congressional leaders, which will support lost revenue for state and local governments;
- Tap into some of the $1.1 billion in cash surplus and rainy day fund for the interim period;
- Use part of $53 million allocated to Hawaii schools and colleges under the CARES Act;
- Take advantage of the significant savings from school buildings being closed in the spring semester.
Rosenlee told the governor “the decisions you make in the next few days will have long-term and potentially permanent impacts for Hawaii's teachers, our keiki, and our economy. “
“HSTA asks, on behalf of Hawaii’s teachers and the keiki that we serve, that you take the right actions, and not rush immediately to the wrong ones, during this crisis,” he concluded.
AFSCME says U.S. Treasury will allow relief aid flexibility
Lee Saunders, president of the international parent union of the Hawaii Government Employees Association and the United Public Workers, also wrote Ige Wednesday, offering him several other options, saying “it is a mistake and unnecessary to furlough, lay off or reduce the compensation of public workers in Hawaii at this time."
Saunders, who heads the American Federation of State, County and Municipal Employees (AFSCME), said that tens of thousands of HGEA and UPW members in Hawaii have been “hard at work during this crisis performing health care, social services, sanitation, and public safety functions. In many cases, they are doing so at personal risk of contracting the virus themselves.”
Saunders urged Ige to seek out several alternatives, which he said “are far preferable to compensation reductions which will serve to reinforce and prolong the recessionary impact of the pandemic.”
The Coronavirus Relief Fund, enacted as part of the CARES Act, provides Hawaii with $1.25 billion in funding, he said.
“Although the program limits the use of the funds to un-budgeted COVID-19 response, we understand that (the U.S.) Treasury will issue guidance in the coming days that will authorize states to use the funds liberally,” Saunders said. “We urge that you immediately contact the Treasury Department to ascertain what, if any, restrictions remain on the use of the funds. In addition, the state has incurred substantial COVID-19 related costs that can fairly be characterized as un-budgeted and you should direct your departments to ensure the proper accounting so the state can make full of its allocation.”
In addition, Saunders said, “We understand that the federal government is waiving the 25 percent match requirement to access disaster relief funds under the Stafford Act for some states. This will have the effect of making more money available for other purposes. Stafford Act funds are available for hazard mitigation and other purposes. Given Hawaii’s long history with this program, I am confident in the state’s ability to access appropriate funds.”
HGEA lists a menu of financial options to avoid reducing salaries
On Tuesday, HGEA Executive Director Randy Perreira wrote the governor, pointing out UHERO's findings that cutting government employees' pay would have long-term negative consequences for Hawaii's economy.
In an earlier April 14 letter to Ige, which HGEA cc'd to state legislative leaders, Perreira proposed that before implementing pay cuts or furloughs, the state consider tapping some of the following:
- Department-specific savings, such as vacancies, as well as contracts for consultants and so-called 89-day hires.
- An extensive review of special funds to convert.
- Existing state funds, such as the $360 million Rental Housing Revolving Fund, the $325 million Emergency and Budget Reserve Fund, and the $51 million Mental Health and Substance Abuse Special Fund.
- Forgoing payments to the Employees Retirement System (ERS), which cost about $1 billion a year, as well as the pre-payment of the unfunded liability for the Hawaii Employee-Union Heath Benefits Trust Fund (EUTF), which is estimated at $814 million per year.
- Converting several General Fund-budgeted capital improvement projects to bond issuances to ensure liquidity.
Airport firefighters' union president 'vehemently' opposes pay cut for first responders
Like Hawaii's nearly 14,000 public and charter school educators, the state's 230 airport firefighters have continued working during the pandemic, although they can't work from home. Ige's administration has said state first responders, such as those airport rescue firefighters, known as ARFFs, could face a 10-percent pay cut, less than the 20-percent salary reduction that teachers and other state workers could endure.
Bobby Lee, the president of the Hawaii Fire Fighters Association, wrote to Ige Monday, "to vehemently express our opposition to any anticipated executive budget proposal cuts" that would affect his members.
"As tens of thousands of Hawaii state public employees were ordered to not come to work and shelter-at-home for weeks, our ARFF members as first responders were not only required to come to work but were also required to respond to emergency incidents and deal with this unknown threat," Lee said.
"As frontline workers, first responders live every day with the constant stress, fear and anxiety of being infected as they perform their jobs and worse, taking this virus home and infecting their families and loved ones," Lee wrote to the governor.
'Rather than a proposed pay reduction, should hazard duty pay be a consideration?" Lee asked.
Ige delays initial cuts date, claims pay reductions are 'last resort'
While Ige's budget and personnel officials have floated the pay cuts in private meetings with Hawaii union leaders, the governor's public statements late last week and Monday appeared to backpedal from the original threat.
First, state officials told union leaders the potential effective date had been delayed by one month from May 1 to June 1.
Second, at a news conference Monday, Ige said, “I just really want to assure everyone that salary reductions would be the last resort.
“We’d be looking at all available options of funds, rainy day funds, support from the federal government in different ways before we look at salary reductions,” Ige told reporters.
“We certainly are working with our congressional delegation about funds to support the state and recover lost revenues, and those funds and those grants would be important because they would allow us to maintain employment and not have to look at reductions in salaries,” Ige added.
States, cities need massive federal aid package
Many governors and mayors across the country had hoped help would soon arrive from Washington after Democrats in Congress held out on a new stimulus bill for weeks to, in part, secure $150 billion in aid to backfill local budgets. But the $484 billion coronavirus relief package that passed Congress this week and was signed into law Friday by President Donald Trump only offers assistance to small businesses, hospitals, and money to ramp up testing, Politico reported.
The chances of getting that funding in the next federal stimulus bill — buoyed Tuesday by supportive comments from Trump who said he supports an aid package for states and municipalities — plummeted on Wednesday as Senate Majority Leader Mitch McConnell (R, Kentucky) said state and local governments should “use the bankruptcy route.”
Gov. Phil Murphy (D, New Jersey), the chairman of the Democratic Governors Association, said his breath was “taken away“ by McConnell‘s remarks on conservative talk radio host Hugh Hewitt's program. Murphy pleaded with Congress to send direct cash relief to states.
U.S. Rep. Peter T. King (R, New York) called his fellow Republican McConnell’s remarks “shameful and indefensible.” “To say that it is ‘free money’ to provide funds for cops, firefighters and healthcare workers makes McConnell the Marie Antoinette of the Senate,” King said on Twitter on Wednesday night.
States do not have the ability to declare bankruptcy to reduce their financial obligations, but McConnell raised the possibility of letting them do so rather than pouring federal money into rescuing them, which would push the federal government deeper into debt.
Congressional Democrats have promised to continue fighting for state and local government relief in the next round of stimulus funding, setting up another major partisan battle.
Until funding arrives, local leaders from Hawaii to New York will face unprecedented revenue losses and start to revisit tactics from the Great Recession in order to cut costs.
“I get small businesses. I get airlines. How about police?” Gov. Andrew Cuomo (D, New York) said on Tuesday, pointing to other recipients of the stimulus funding. “How about fire? How about health care workers? How about teachers? We’re not going to fund schools? I don’t get it. I don’t get it. That’s why I’m not in Washington.”
Cuomo, whose state has been hit the hardest by the virus, said later Tuesday that he had a “productive“ meeting with Trump that included talks about funding for the states. Trump, asked about the interaction at his own news conference, confirmed he was supportive of using federal money to help states and local governments.
States need hundreds of billions of dollars to weather this crisis. The alternative is a catastrophe, according to an analysis by Vox.