Gov. Linda Lingle yesterday defended her furlough plans for state workers from an objection by the federal Social Security Administration.

The federal agency warned that furloughs of federally funded workers in the state Department of Human Services could cost the state $1.9 million in federal money and delay the processing of about 3,000 Social Security claims over two years.

In a letter to the Social Security commissioner, the governor wrote that her decision to furlough all state workers "recognized that employees working side-by-side, whether their paychecks come from federal funds, state funds, special funds, or other taxpayer resources, should be treated in the same, even-handed manner."

"It is troubling that some would argue they are 'special' or should be set apart from their brethren, simply because their pay comes from a federal source."

Lingle will outline in more detail her plan to furlough state workers at a news conference this afternoon.

Public-sector labor unions went to court on Tuesday to try to block the governor's furlough plans, contending that furloughs should be the subject of collective bargaining talks as union contracts expire at the end of the month.

Michael Astrue, the Social Security commissioner, wrote Lingle on June 9 objecting to furloughs for workers in the state Department of Human Services' disability determination branch. The federal government pays the salaries of 36 state workers and 16 medical consultants under contract, who help process disability claims.

Astrue argues that these state workers should be treated differently because of their federal role. He claimed no other state is furloughing as many state workers for as long as Hawai'i. Lingle has ordered three furlough days a month for two years to save the state $688 million and help contain a budget deficit.

"Not only are you denying full salaries — that we pay for — to DDB employees, you are harming those Hawaiians who have applied for disability benefits and now will wait even longer for a decision as a result of your furlough plan," Astrue wrote. "In addition, those Hawaiians whose federal benefits are delayed will rely on state programs, adding to the state's costs."

'WILLING TO BARGAIN'

The exchange with the Social Security Administration shows some of the practical challenges the governor is encountering as she tries to develop her furlough plans.

The Lingle administration and county mayors submitted proposals to the unions yesterday during a meeting at the United Public Workers headquarters that was attended by a federal mediator.

Randy Perreira, the executive director of the Hawai'i Government Employees Association, said he remains optimistic despite the escalation in rhetoric over the past few weeks.

"The four unions are certainly willing to bargain some kind of resolution that will include some employee sacrifice," he said.

The state's congressional delegation, citing the Social Security Administration's objections, called Lingle's furlough plans troubling and urged the governor to reconsider. The delegation warned that other state workers who are federally funded could be in a similar situation as workers at the disability determination branch.

"While we understand the gravity of the state's economic situation, your plan to furlough all state employees for three days per month for two years, which will reduce social services just when many Hawai'i residents will need them most, is troubling," wrote U.S. Sen. Daniel K. Inouye, U.S. Sen. Daniel Akaka, U.S. Rep. Neil Abercrombie and U.S. Rep. Mazie Hirono, all Democrats.

Lingle, in her response to Astrue, said her administration would monitor the workload in the disability determination branch and could add workers if demand increases, using some of the savings from furloughs to help cover the costs.

The governor again warned that the alternative to furloughs is layoffs.

"Failure to institute furloughs will leave Hawai'i with little choice but to start massive layoffs of state personnel that could result in the shutdown of entire programs," she wrote. "Furloughs allow the state to continue to carry out its mission, avert layoffs, maintain employee benefits, and avoid recruitment and training costs for new employees when the economy recovers."

SEVERE MEASURES

While union leaders and some Democrats have criticized the Republican governor for acting unilaterally on furloughs, some Republicans counter that union leaders and Democrats have not offered a credible alternative to close what Lingle now describes as a $730 million budget deficit.

Union leaders have suggested an increase in the general-excise tax, which would not come until next year unless the state Legislature returns in special session. Some Democrats have mentioned that Lingle could restrict spending over the next several months and then work with lawmakers on an amended two-year budget next session, including the possible use of the state's rainy day and hurricane relief funds.

"Furloughs are the most cost effective, the least painful, and nobody loses their job, nobody loses their tenure, nobody loses their seniority, nobody loses their benefits," said state Rep. Gene Ward, R-17th (Kalama Valley, Queen's Gate, Hawai'i Kai).

Confrontations between governors and public-sector labor unions have occurred in several states, including California, New York and New Jersey, where, like in Hawai'i, governors have warned of layoffs of thousands of state workers unless unions agree to concessions.

Lingle's order of three furlough days a month for two years and her estimate of 10,000 layoffs as the alternative is among the most severe in the country. But several labor and political insiders privately doubt the governor would lay off so many state workers without more convincing evidence of an immediate budget crisis because of the likely public backlash at the loss of state services and programs.

The National Governors Association, in a fiscal survey of states released this month, found that nearly three-quarters of states are recommending fiscal year 2010 budgets with negative growth because of the recession. The survey, completed before Lingle ordered furloughs, found that 17 states had used layoffs and 15 states had used furloughs, with several states adopting both methods to help close budget gaps.