Capsun's Corner – by Capsun M. Poe

“The reality is that we will have to make some unpopular choices that will reduce some services and cause others to be delivered in a different way.  Not because we want to, but because we can’t afford business as usual.”

“We will have to ask our government employees, like those who work in the private sector, to accept some reduction in wages and benefits.  Not because we want to, but because we can’t afford business as usual.”

-Gov. Linda Lingle in her 2009 State of the State Address, January 26, 2009

Photo: Office of the Governor

When I ask the question in the title of this post, I don’t mean on a volunteer basis, nor for the short term.  As most people were expecting, Gov. Lingle yesterday had gloomy news to share about the Hawaii economy.  And she thinks things will get worse, warning us to expect lower economic forecasts by the Council on Revenues at its next two meetings.  This follows a national trend of state and local governments considering or implementing layoffs to cope with the budget deficits.  And even President Obama has instituted a salary freeze for top-earning aides at The White House.

That second quote by Gov. Lingle should come as no surprise.  She has been spreading a “shared sacrifice” theme to her messages about finances.  It wasn’t that long ago that she asked State departments to submit plans for 10%, 15%, and 20% cuts.  I agree that these tough times will probably get tougher.  And with the recent attention on legalized gambling, it looks like government leaders are open to new, previously unthinkable, and even innovative ideas.  Some of those used in other jurisdictions could soften the blow.

So let’s get back to the numbers.  With approximately 20 work days in a month, 10% would be two days, 15% would be three, and 20% would be four.  I don’t know for sure, but I think many public employees would be unwilling to take paycuts.  Perhaps more accurately, they may be unable to because of financial commitments like mortgages or rent, and families to raise , college tuition to pay, or educational loans to payoff – thus their unwillingness.

But let’s say they (should I say we?) are willing to take those cuts, for the sake of our community and State coffers.  How would that work?  Do employees still work every day in the month, and just accept the reduction?  I think that’s what government leaders are looking for.  Unfortunately, that would probably be bad for morale, which would in turn be even worse for a consumer of those employee’s services.  Haven’t you ever dealt with a government employee having a bad day?  Not fun, not fun at all.  Just try to imagine that for a sustained period of time.

I’m not going to complain about this.  Instead, I come to the table with solutions to offer and proffer.

But I also think a fairer, and far more acceptable, solution is to give employees unpaid leave.  So, if 10% cuts are needed and agreed upon, a worker could take off two workdays a month, without pay.  Managers can arrange ahead of time with employees to ensure adequate staffing levels, while still honoring the days off required under this deal.  This option is much more likely to win support of government employees, would create actual and immediate savings, and avoid layoffs.  All in all, a pretty good deal in my book.  Personally, I would take the first and third Mondays if it’s a 10% cut, the first three Monday if it’s a 15% cut, and the first four Mondays if it’s a 20% cut.

A similar way of implementing this idea is  giving employees extra vacation time in exchange for the reduction in pay.  So if my pay were cut 10%, I would receive two extra days of vacation a month, three days for 15%, and four days for 20%.  The State could even track these “extra” vacation days separately and mandate that employees can’t use them until a specific date (let’s say after July 1, 2012) or a specific milestone is achieved (perhaps when tax revenues return to 2007 levels, adjusted for inflation).  That may be tricky to implement, but it would be a departure from business as usual.  This would also be a pretty good deal, and I would say, a fair deal.

In difficult financial times in the past, the State has put a good part of the burden on State employees.  Don’t forget that in the 90s, they didn’t fully contribute to the Employees’ Retirement System (ERS), the retirement plan for Hawaii’s State and County employees.  Diverting those funds for a number of years contributed to the ERS’ huge shortfall.  State employees are also on a mandatory pay lag system that forces some to wait between one and two months for their first paychecks.  I know first-hand, I’ve had this happen to me four times.  Another pay lag would not only be unpopular, it might lead to upright revolt.

Desperate times call for desperate measures. Immediately, the State needs to find $75 million in savings, about $300 million next year, and over $500 million the year after.  To Gov. Lingle and other policy-makers:  while I don’t want to take a paycut, I am willing to consider one if it will save my job, those of my co-workers, and throughout Hawaii.  However, if we are going to do this, let’s take direction from President Obama and start at the top.  The Governor, Lt. Governor, and Cabinet could all take the first reductions in salary.  Then let’s see how they get by.  If the top earners in the Executive Branch can’t swallow it, how can we expect the bottom ones to do the same?

It will send a clear, powerful, symbolic message that those at the top are also willing to feel the pain.  It seems to me that often in times like these, the ones making the decisions somehow manage to forget to feel some of the pain themselves.

Mahalo!

Tags: budget cuts, council on reveneues, employees retirement system, ers, Hawaii, lingle, state of the state