State Workers Would Face Pay Cuts up to 20% Under Ige’s Plan to Offset Budget Hit of Coronavirus

Governor David Ige. PC: State of Hawaii

Hawai‘i state employees may be looking at pay cuts across the board, as tax revenues shrink amid the COVID-19 pandemic.

Union leaders throughout the state say Gov. David Ige has floated the idea of a 10% to 20% cut to all state workers including teachers and nurses. The governor didn’t confirm or deny that figure at a press conference Wednesday afternoon, saying instead that his administration is in talks with state legislators and the relevant unions about how to manage projected budget cuts of $1.5 billion over the next 15 months.

“Main sources of state revenue have been drastically reduced,” said Ige, naming the General Excise Tax and Transient Accommodations Tax specifically, as more than 100 hotels and resorts have shut down statewide due a lack of business caused by the coronavirus.

“State government needs to look very differently moving forward,” he continued. “We definitely will have to take action in order to balance our budget.”

Cuts of 20% to teacher salaries were reportedly part of Ige’s proposal and could go into effect as early as May. First responders and state-employed healthcare workers would be looking at pay cuts of 10%. All state employees, under Ige’s proposal, would be faced with reduced pay for two years.

Randy Perreira — executive director of the Hawai‘i Government Employees Association, the largest in the state — expressed a lack of faith in the governor.

“(State employees) are keeping vital and essential government services running and many are putting their own health and safety at risk because they haven’t been given adequate personal protection equipment,” Perreira said in a statement Wednesday.

For teachers, monthly wages would fall between $600 and $1,800, depending on current salary if a 20% pay reduction were implemented.

Corey Rosenlee, president of the Hawai‘i State Teacher Association, said Ige’s proposal would exacerbate the existing statewide teaching shortage after losing negotiated raises that were supposed to become law this year.

State legislative leaders also came out as opposed to the plan.

“If we have to look at pay cuts at the state level, we should start off from the top down,” she said. “But that’s a ways away. There are many factors to consider.”

“Anything like that has major implications and it’s questionably counterproductive to the economy to take people’s pay away,” she continued.

Federal dollars might still funnel to Hawai‘i to alleviate the economic destruction caused by the COVID-19 pandemic.

More than $860 million in federal aid is at the state’s disposal now, but it comes with stipulations that it can’t be used to raise the salaries of already-hired state employees. Hawai‘i’s Rainy Day Fund, which totals roughly $400 million, can’t be used in that capacity either, Ige said on Wednesday.

Employee salaries and benefits represent the highest expenditures in the state budget annually. While county budgets will be less affected by the COVID-19 pandemic because the vast majority of revenue is tied to property taxes unlikely to be so affected, the state is heavily reliant on tourism dollars.

Arrivals by air have dropped in Hawai‘i between 98% and 99% year-over-year due to mandatory quarantines and stay-at-home orders, while cruise ships carrying tourists free to move about the islands haven’t dropped anchor in Hawai‘i ports in weeks.

The governor said he would consider all options before making a decision that impacts the salaries of state workers.

“Our employees are an important asset and (pay cuts) would be a last resort,” Ige said.