Pay cuts for Hawaii state employees seem less likely after the White House and congressional leaders agreed Tuesday on a new $470 billion coronavirus relief plan and the president pledged to add financial aid for states and cities into the next federal relief package.
The Hawaii State Teachers Association has already called on the governor to use alternate sources of funds to assure that teachers and other state employees won’t need to endure pay cuts as they continue working during the outbreak.
HSTA President Corey Rosenlee said the state has other options than the 20-percent pay cut floated last week by Gov. David Ige’s administration, noting that the state’s cash surplus at the end of last fiscal year combined with the “rainy day” budget reserve fund total more than $1 billion, and the CARES Act approved by Congress and President Donald Trump on March 27 included $863 million to bolster Hawaii state government finances.
President says next aid package will bring more aid to states, cities
In announcing Tuesday’s deal on the latest federal aid package deal, President Trump said he’d sign the measure and begin discussions on the next round of stimulus.
In a tweet, Trump urged Congress to approve the package, adding, “After I sign this Bill, we will begin discussions on the next Legislative Initiative with fiscal relief to State/Local Governments for lost revenues” and other spending.
Trump said on Twitter that a further funding measure should include aid to state and local governments as well as “much needed Infrastructure Investments for Bridges, Tunnels, Broadband, Tax Incentives for Restaurants, Entertainment, Sports, and Payroll Tax Cuts to increase Economic Growth.”
Democrats had pushed for $150 billion in aid to states and local governments but Senate Majority Leader Mitch McConnell (R, Ky.) and Treasury Secretary Steven Mnuchin took a hard line against including that money which was not inserted in the proposal approved by the Senate Tuesday and expected to win approval by the House Thursday.
I urge the Senate and House to pass the Paycheck Protection Program and Health Care Enhancement Act with additional funding for PPP, Hospitals, and Testing. After I sign this Bill, we will begin discussions on the next Legislative Initiative with fiscal relief….
— Donald J. Trump (@realDonaldTrump) April 21, 2020
Congressional Democrats believe that fiscal aid to states is one of the most effective forms of economic stimulus, and many economists agree.
Gov. David Ige said during a news conference Monday, “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.
Late last week, state officials informed union leaders the implementation date of the potential salary cuts had been delayed by at least one month, to June 1 instead of May 1.
“HSTA and other public sector unions have made it clear to the governor that this will exacerbate our weakening economy, hurt government employees, and potentially prolong this crisis,” Rosenlee said. “We stand united and will not accept the governor’s plan without exploring every last alternative to keep these harmful cuts from happening.”
Tuesday’s federal aid package deal adds testing, hospital aid
The latest aid package provides funds for a tapped-out small business aid program and aid for coronavirus testing and overwhelmed hospitals, according to a Bloomberg News article published by the Honolulu Star-Advertiser.
The Senate approved the proposal late Tuesday in Washington, D.C., and a House vote as soon as Thursday is expected, lawmakers said.
The new package would provide $310 billion to replenish the Paycheck Protection Program for small businesses, which was part of the $2 trillion stimulus approved late last month and ran out of money last week.
Passage would allow the government to take new applicants for the program, which provides forgivable loans to small business that keep employees on the payroll for eight weeks. Of the new funds, $60 billion would be set aside for smaller financial institutions.
In addition, the plan includes $60 billion in loans and grants for a separate Economic Injury Disaster Loan program; $75 billion for hospitals with a significant portion aimed at those in rural areas; and $25 billion for virus testing.
Hirono: states need "flexible funding"
U.S. Sen. Mazie Hirono (D, Hawaii), said, “Since the passage of the CARES Act in March, I have been focused on making important reforms to the Paycheck Protection Program to help small businesses that need it most, providing additional funding to support to our hospitals and health care providers fighting the pandemic, and ensuring that immigrants and other vulnerable communities are able to access care and benefits. It has also become clear that we need robust, flexible funding to assist our state and local governments with their budget shortfalls.
“While this legislation does not include every priority I’ve been fighting for, it is the product of extensive bipartisan negotiations and includes provisions made possible by the unity of Congressional Democrats – notably by ensuring that financial assistance will be available to small businesses in underserved and minority communities," Hirono added.
One of the final sticking points was language on how the new testing program would be run.
House Speaker Nancy Pelosi (D, Calif.) said on CNN Monday night that there was an agreement on the principles of the aid package and that negotiations were “down to the fine print.” Pelosi and her leadership team sent members notices for a Wednesday caucus call to go over the emergency funding measure.
Democrats had blocked a bill almost two weeks ago that would have added $250 billion to the small business aid plan without the extra money for other programs. Republicans hammered Democrats for the move, but Democrats argued that more hospital funds were needed amid the COVID-19 pandemic, even if all previous funds hadn’t yet been spent.
Ultimately, Mnuchin, the treasury secretary, decided to strike a bipartisan deal with Pelosi and Schumer by acceding to some of their demands.