Governor calls for salary freeze for state officials

A two-year salary freeze proposed by Hawaii Gov. Linda Lingle on Dec. 21 would save the state more than $4.1 million, partially offsetting a $1.1 billion projected budget shortfall. Lingle said she will propose legislation suspending for two years pay raises for state elected officials and top administrators in the executive, legislative and judicial branches.

The bill, if passed during the 2009 legislative session, which begins Jan. 21, could delay pay raises for 208 employees set to go into effect on July 1. Those increases are currently scheduled based on recommendations made by the state Commission on Salaries in 2007. It would apply to 42 executive branch officials, including the governor, lieutenant governor and chief of staff, who are set to get 5 percent raises on July 1, 2009, and 3.5 percent raises on July 1, 2010.

90 judges, including the justices of the Hawaii Supreme Court, would also be affected. They are now scheduled for increases of 10 percent on July 1, 2009, and 3.5 percent on July 1, 2010.

The bill would also mean 76 state legislators would not get a 3.5 percent increase scheduled for Jan. 1, 2010. What’s more, Lingle wants the Legislature to forego a 36 percent, or $12,808 per legislator, salary increase lawmakers are set to receive on Jan. 1. Lingle also asked that state public employee unions not propose raises in upcoming collective bargaining negotiations.

In addition, Lingle in early December ended the practice of granting paid half-days to the state’s 53,000 employees on Christmas and New Year’s Eve. Department heads still have the discretion to grant vacation leave, but the move will mean $15 million will be paid for work rather than time off on administrative leave.

Lingle also plans to ask the Legislature to transfer $40 million from the state's Emergency Budget and Reserve Fund just to make it through the current 2009 fiscal year, which ends June 30. For fiscal year 2010, she proposes to take an additional $35 million from the "rainy day fund" and transfer $45 million from special funds to the general fund.

The one-time transfers would take $36 million from the Deposit Beverage Container Special Fund, set up to fund the state bottle deposit recycling program, and $9 million from the Wireless Enhanced 911 Special Fund, funded through monthly surcharges to cell phone users to pay for wireless emergency phone services.

The governor’s proposed budget for fiscal years 2010 and 2011 will cut the general fund budget by $395 million. Her proposal to the Legislature includes refinancing general obligation bonds, funding programs with other financing, reduce operating costs by eliminating low-priority programs and minimizing cuts in important areas such as clean energy.

“The budget was prepared with three major goals in mind: to preserve essential services, to continue to invest in resources that are part of the administration's long-term priorities, and to avoid the layoff of any existing government employee,” said the governor’s weekly email newsletter.

“In this current economic environment, we cannot operate in a business-as-usual fashion,” she said in a statement. “Difficult but necessary decisions have been made to reduce overall spending. I am satisfied that this biennium budget being proposed to you reflects the kind of fiscal prudence and discipline the people of Hawaii expect during these challenging times.”

Lingle wants to tighten up tax laws, improve tax collection and administration and reduce excessive tax credits. The budget priorities may change depending on the Council on Revenues’ next projection, due in January.