BREAKING: Most State Workers to be Furloughed Two Days Per Month Starting in New Year

Governor David Ige. PC: file Office of Gov. David Ige / Flickr

Governor David Ige announced today that state employees will be furloughed two days a month starting Jan. 1 of 2021, to balance the state budget.

The state is projecting a $1.4 billion budget shortfall in the general fund for each of the next four fiscal years.

“As governor, I must address this shortfall responsibly.  I must take steps now to enable state employees to remain in their jobs that keep the government running and minimize layoffs,” said Gov. Ige during an afternoon press conference in which he directed state agencies to prepare to implement the plan with most state employees in the new year.

The furloughs will not apply to positions that support 24/7 functions, nor will they apply to jobs funded with non-general fund sources. This includes about 4,600 employees who are first responders, medical and public safety personnel, and employees at the departments of Commerce and Consumer Affairs and Transportation (Airports, Harbors and Highways divisions). Specifically, the furloughs do not apply to Bargaining Unit 9 Registered Professional Nurses, Bargaining Unit 10 Correctional Institutional and Health positions, and Bargaining Unit 11 Hawaiʻi Firefighters Association.

Gov. Ige said the state Department of Education and the University of Hawaiʻi are both part of the furlough, but they will be announcing the specific ways that they will be implementing the furloughs at a future date.

“As you know, we are focused for public schools, on ensuring that the students get the instructional days that they need in order to be promoted to the next grade level,” said Gov. Ige. In reference to teachers specifically, Gov. Ige said, “Their academic years are different… The University and the DOE will be announcing how they will be implementing furloughs.  It will be different and it won’t be the two furlough days per month.”

About 10,160 executive-branch employees will be subject to the furlough.

Beginning in the new year, affected employees will be required to take two unpaid days off every month, reducing employee pay about 9.2% while in effect.

“If the furlough is effective for one year, the state will save about $300 million. This is the last major element of the balanced budget that I am required to submit to the state Legislature every December,” said Gov. Ige. “The pandemic has had harsh economic impacts on our country, and as a result, every state is having to make difficult choices. Hawai‘i is among the hardest hit states in terms of job loss and lower economic activity, because of the state’s reliance on tourism.”

In making the announcement, Gov. Ige said he joins his cabinet members in volunteering to decrease their own pay equal to the amount of the furlough savings.

“I will evaluate the need to continue the furlough on an ongoing basis,” said Gov. Ige.  “We will adjust as the economy recovers and tax revenues increase.  The furlough will be rescinded as soon as it is no longer needed.”

Over the past eight months, the state has been closely assessing COVID-19’s impact on the economy, addressing the loss of tax dollars and the need to budget for new emergency initiatives.

According to Gov. Ige, the state has already taken the following cost-saving steps:

Pulled back $197M of the executive’s FY 2021 supplemental budget request and legislation, and the Legislature further reduced the FY 2021 base budget by $205M.
Temporarily suspended pre-funding of the other post-employment benefits (state retiree health benefits) liabilities, saving $390M.
Restricted 10% of the discretionary portion of the FY21 budget that was approved by the Legislature and instituted a hiring freeze on 3,000 non-critical position vacancies.
To provide additional resources to the general fund, the Legislature authorized the transfer of $345M of rainy-day fund reserves and $303M from various other funds to the general fund budget.
The state recently issued $750M in short-term bonds to cover current operating expenses.
Going forward, the state is looking at cutting program budgets by $600M every year starting in FY 2022.

“We explored all other options for balancing the budget and have tried to avoid furloughs. I know how hard state employees have been working during this difficult period and I realize how much distress this will cause our employees and their families. However, the harsher alternative to furloughs is layoffs, which has already complicated the lives of thousands of fellow citizens who work in the private sector,” Ige said.

Details on how the furloughs will be implemented, will be announced soon.

“To those who say we can wait to implement these furloughs, I say any new federal stimulus funding we may receive will not make up for the massive budget shortfall we are presented with,” said Gov. Ige, noting that previous congressional funding explicitly prohibited making up state budget shortfalls with the funds, and focused on providing relief to the community.

“Every month that we wait to take action, makes us rack up more debt and burn through our working capital.  And as the state’s largest employer, how can we not share in the pain when so many of our fellow citizens are experiencing economic hardship,” he said.