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The Honolulu Advertiser
Posted on: Wednesday, July 29, 2009

Lingle, unions should just split the difference

By David Shapiro

Many state workers feel they're being unfairly singled out for punishment in contract negotiations in which the state is trying to slash nearly $700 million in labor costs to address the worst budget deficit since statehood.

Some union officials have expressed the view that workers in the private sector whose jobs have been hard hit in the recession are jealous of public workers whose jobs are relatively stable, and want them to suffer, too.

The unions and their supporters argue that large-scale pay cuts or layoffs for public employees are not needed to balance the budget and would hurt the overall economy by reducing the consumer spending power of tens of thousands of government workers.

"It's going to be one of the worst hits the economy has taken," said Lawrence "Bill" Boyd, a labor economist at the University of Hawai'i-West O'ahu and a state employee.

"People make these statements that the private sector did this so the public sector should do that so essentially we're going to have a swine-flu party and make sure a lot more people get sick," Boyd said. "Why wouldn't people see that as a major problem?"

The alternative espoused by the unions to balance the budget without large public-worker pay cuts raising the general excise tax would also take hundreds of million dollars of consumer spending money out of the economy, just mostly not from them.

So the issue isn't about suffering that because private-sector workers have suffered, state workers should also suffer. It's about fairly spreading the sacrifice across all sectors. Private-sector workers who have already endured layoffs, pay cuts and loss of hours shouldn't have to sacrifice even more in the form of significantly higher taxes so state workers have to sacrifice little.

The four public-worker unions negotiating with the state have offered to take modest pay cuts in their latest proposal to Gov. Linda Lingle.

The key to ending the drama and anxiety now boils down to agreeing on an equitable number, and it's amazing how often these disputes are most fairly resolved by simply splitting the difference.

Lingle initially asked employees to take three furlough days a month, the equivalent of a 14 percent pay cut. She later modified her proposal to a 7 percent outright pay cut and one and a half furlough days a month still about 14 percent. The four unions have offered to take 5 percent pay cuts.

So splitting the difference would mean cuts of about 9.5 percent, which is close to the 10 percent recently taken by employees of The Maui News, a good example of what's occurring in the private sector.

Such a compromise could easily be achieved by taking the 5 percent offered by the state unions and adding one of Lingle's three furlough days or by going with two furlough days and no outright pay cuts so workers get days off for the pay they give up.

In terms of balancing the budget, most of the difference could be made up by tapping the Hurricane Relief Fund, which has outlived its original purpose, and the Rainy Day Fund, created for exactly this purpose.

It makes no sense to continue sitting on the money in these funds while making either public workers or taxpayers sacrifice more than necessary. If it rains any harder, we'll need Noah's Ark, not a contingency fund.

If a fair compromise on public worker pay cuts and tapping the special funds doesn't balance the budget, then it would be reasonable to consider a small, temporary increase in the general excise tax.