Hawaii Could Tap Hurricane Emergency Fund to Shore-Up Budget

July 10, 2009

A Hawaii judge has blocked Gov. Linda Lingle from forcing thousands of public employees to take three unpaid days off per month, dealing her a setback in efforts to tame a huge state budget gap. Unions opposed to the furloughs instead suggested the state tap into its hurricane emegency fund.

Citing a $729 million budget shortfall over the next two years, Gov. Lingle said a fiscal emergency existed that empowered her to unilaterally impose what amounted to a nearly 14 percent pay cut. But three state employee unions — Hawaii Government Employees Association, United Public Workers and the Hawaii State Teachers Association — basing part of their challenge on constitutional grounds, asserted that Lingle was overstepping her authority. Circuit Court Judge Karl K. Sakamoto agreed and issued an injunction against Lingle.

The state constitution’s provision granting public employees the right to collective bargaining bars the governor from altering state worker wages and hours without negotiating with their representatives, he ruled.

“Furloughs involve wages, actual wages decreasing,” Sakamoto said. “Furloughs as core subjects of collective bargaining must be negotiated.”

Board of Education Chairman Garrett Toguchi said he was glad his board did not act prematurely on school budget cuts “that were based on Governor Lingle’s drastic and unnecessary furlough plan.” Deep state budget cuts to public schools without the ability to implement furloughs or wage reductions would likely lead to layoffs, fewer schools days, and also hamper the Department of Education’s ability to effectively use federal stimulus funds to implement reforms under the American Recovery and Reinvestment Act, he said.

“More importantly,” Toguchi continued, “the ruling underscores the urgent need for our elected leaders to tap into our state’s Hurricane Relief and Rainy Day funds or enact a slight, temporary raise of the General Excise Tax to preserve education funds, avoid layoffs and ensure our state emerges from this fiscal crisis as soon as possible. Now it is clear, the Legislature needs to act and save public education from what may be the nail in the coffin as schools struggle to comply with the No Child Left Behind Act.”

Toguchi pointed to opinions from University of Hawaii economists as well as national public policy think tanks that support strengthening the economy through a combination of furloughs and tax increases.

“Hawaii’s public schools are waiting for bold and decisive action to be taken in strengthening the local economy, action that shows leadership,” he said. “The governor can still negotiate furloughs and the Legislature can still re-appropriate the Hurricane Relief and Rainy Day fund money. No matter what the board does with respect to our budget, we can plug the holes for only so long.”

Following Hurricane Iniki that struck the islands in 1992, the state implemented the Hurricane Relief fund as a state-based emergency fund. However, payments into the fund were discontinued in 2001, and the fund is estimated to be worth approximately $180 million today.

The Associated Press contributed to this article.

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