Second Opinion
Our legislators' dilemma

By Cliff Slater

The Tax Foundation's latest estimate of the Hawai'i state budget situation shows that our legislators face some unpleasant decisions in the next few weeks.

Even if they were to grant no raises at all to our public workers (including teachers), the state budget will still be in deficit: Forecast tax revenues will be less than forecast spending. Granting public workers the raises that have been negotiated or demanded on top of the basic spending would lead to deficits of around $200 million annually.

Obviously, something has to give.

Legislators are faced with unpleasant choices. Either raise taxes or cut basic spending, or do some of both.

In considering cutting spending, one useful way to look at state spending is to review prior years' outlays and then allow for Hawai'i's inflation and population changes. In short, look at state spending in real dollars per capita over time.

When we do that and compare 1984 spending with that of 1999, we see state spending is up 40 percent, or $1.85 billion — even allowing for inflation and population changes.

There is a hint here that there may some fat in such an alarmingly high increase. After all, if we are looking for $200 million to balance the budget, that is only around 10 percent of what real spending has increased over the past 15 years.

Relatively speaking, the Cayetano administration has held spending in check. However, it followed the Waihee administration, one with all the frugality of sailors on shore leave.

All this is borne out by the number of state employees we now have. When the Waihee administration took office, we had 46,500 state employees, and that grew to 62,600 by the time he left. Under the Cayetano administration, it has grown to 67,000.

If we adjust the 46,500 state employees Waihee inherited upward for the 15 percent Hawai'i population growth during this time, then we could possibly justify 53,500 state jobs. We actually have 12,000 more than that. The cost of these extra state employees is around $600 million annually.

There is even fat in education, for example. We spend $6,900 per student, or $170,000 per classroom of 25. One has to wonder where all that public school money goes.

Allow, say, one and a quarter teachers at $50,000, plus some miscellaneous books and help, and it is tough to get past $80,000 — less than half what we actually spend in total. Maybe this is the real "trickle down" economics: education funding evaporating on the way to the classroom.

So what is our way out of this mess? It's simple — but unlikely.

Legislators could bite the bullet and commit to collective bargaining reform. This would take a little time to implement but, in the meantime, legislators could work out a plan with public workers so that pay increases would be implemented as state worker numbers decline.

Of course, taking this route means taking on the public worker union leaders, and this clashes with legislators' primary goal in life — getting re-elected. Re-election in this state has always meant getting public worker union support. On the other hand, raising taxes will lose the support of voters.

Not a pretty picture for a legislator.

Cliff Slater is a regular columnist whose footnoted columns are at www.lava.net/cslater