Capitol District, Honolulu - Photo: Emily Metcalf
BY MALIA ZIMMERMAN - Ask a state or county worker if there are too many government employees in Hawaii, and the answer will likely be ?no!?
After former Gov. Linda Lingle cut the government workforce in 2009 and 2010 by between 7 percent and 10 percent, and furloughed others because of challenging economic times, the state?s public unionized employees were in an uproar.
Agricultural Department inspectors claimed invasive species would take over Hawaii; teachers said students would not get an education; product inspectors said consumers would be cheated; and tax department personnel said back taxes would not be collected in a timely manner, thus compounding Hawaii?s state government financial woes.
Since the less fiscally conservative Gov. Neil Abercrombie took office in 2010, he?s looked for ?revenue enhancements? ? tax and fee hikes ? to increase his budget so he could restore many of the state government positions. He is increasing his budget in the next two years by 8 percent and 11 percent respectively. Even with this effort, Abercrombie is still fighting with union leaders, including the Hawaii State Teachers Association, which wants pay cuts during the Lingle administration restored and a pay increase on top of that.
A recent poll by Gallup shows Hawaii has the third highest number of government employees in the nation, just behind Washington DC and Alaska.
That is a slight drop from a year ago when Hawaii was in first place in terms of number of government workers as a percentage of the work force.
But how many government workers does Hawaii need? Should upgraded technology help eliminate some of those positions? How many people on the government payroll and retirement system too many for Hawaii?s tax base to support?
Union Power Prevents Downsizing, Reorganization
Lowell Kalapa, president of the Tax Foundation of Hawaii, said Hawaii has so many public employees because of public unions? strength. Union leaders help get lawmakers elected, and in turn, lawmakers reward them with pay increases, benefits much more generous that in the private sector, and job security.
?Organized labor is not going to let you downsize,? Kalapa said. ?If a program or service gets cut, those employees are shifted somewhere else, not cut.?
Hawaii is supposedly investing in new technology to help government become more efficient, but Kalapa said he doubts that will lead to any layoffs even if clerks and administrators are not needed because of technology.
Taxes Already Sky High
Hawaii already has among the highest overall tax burdens in the nation, the highest income tax, and the highest taxes on gasoline and many other goods.
Hawaii is unique in that it has a General Excise Tax, considered the nation?s most regressive tax because it hits the poor the hardest, which is a 4-4.5 percent tax on all goods and services, including medical services, medicine and food, taxed at each level of transaction.
Lawmakers want more revenue however - and are proposing tax increases on everything from plastic bags, pensions, alcohol, sales of all goods and services, gasoline, oil, bottled drinks, sugar, cigarettes and much more.
Some lawmakers are also proposing to legalize gambling and marijuana and to add a 15 percent tax on both.
$20 Billion Bill
Hawaii?s big government payroll means even more money needs to be set aside for benefits.
Connecticut and Illinois are ranked worst in the nation when it comes to taxpayer burdens from unfunded liabilities, but Hawaii is close behind them, coming in as the third worst ?sink hole? state.
An analysis by The Institute for Truth in Accounting shows Hawaii?s financial burden on taxpayers from unfunded liabilities is $38,300 in 2011, an increase from $32,700 in 2010.
The state?s portion of the $18.2 billion owed to Hawaii public employees for their pensions is more than $13.5 billion, according to the state?s latest financial report in the 2011 CAFR.
All combined the state owes public workers more than $20 billion, and state officials estimate that figure will climb to $37 billion in the next 12 years unless lawmakers put an aggressive plan into motion to pay down the debt.
?Because pension and other retirement benefits are not immediately payable in cash, most of these compensation costs were ignored when calculating balanced budgets,? said Sheila Weinberg, head of Truth in Accounting.? ?Furthermore, the State has set aside only 31 cents to pay for each dollar of retirement benefits promised.?
Hawaii has a balanced budget requirement, but according to the Institute for Accounting?s new web site, http://www.statedatalab.org, Hawaii has accumulated $7.9 billion in bonds and $2.3 billion in other liabilities.
The state has $20.8 billion in assets, including $13.8 billion of capital assets (roads, buildings and land), and $3 billion in assets that are off limits, so just $4 billion is left to cover $22.6 billion in bills.
Weinberg, who has testified before Hawaii?s legislature, said the $18.6 billion shortfall is compensation and other costs incurred that should have been paid in years past, but instead is burdening today?s taxpayers. In addition, the debt jumps $4 billion every two years.
?Unless these pension and retirees' health care benefits are renegotiated, future taxpayers will be burdened with paying for these benefits without receiving any corresponding government services or benefits,? Weinberg said.
?Until you begin to address the generous benefits and the size of government, we will have this problem,? Kalapa said of the looming bills Hawaii taxpayers will have to cover.
Kalbert Young, the state director of Budget and Finance, and former Maui County finance director, said Hawaii should invest $500 million a year for 30 years to pay off the unfunded liabilities. Adding more workers without adjusting the benefits only adds to the debt.
"The consideration that I have always told directors, administrators, elected officials, at the state or county level is that creating programs, necessitates adding positions;?adding positions is not only about increasing payroll, it's about increasing long-term liabilities for every position that is on the government labor force,? Young said.
Young and the governor have asked lawmakers to start by investing $100 million in the next budget cycle, but some lawmakers are still hesitant because they want to spend the money on social service programs.
?The government and the public need to realize that desiring a program is like owning a pet - it should be entered into as a long-term commitment because its a relationship that can not easily be stopped. And once it starts, if it were to end, a number of people in the family are going to be sad and hurt," Young said.
Geography Impacts Government?s Siz
Hawaii government's high job count is partly due to geography, Young said.
The County of Maui, for example, has four islands in its jurisdiction, and there duplicative positions on each island.
?There are clear inefficiencies of asset deployment, because two of the three islands have populations of less than 10,000 people and the main island has more than 100,000 people,? Young said. ?Yet, providing vehicles, offices, machinery, equipment, etc. is limited to the island geography - you can not ?share? assets from the larger population to the smaller population locales,? Young said.
Hawaii Island County also known as the Big Island is divided by massive unpopulated landscapes that break up two major population centers in Hilo and Kona.
?There are also a fair amount of duplicative resources in order to accommodate the geographic divide,? Young said. ?The statistics are very similar to County of Maui. ?I think Alaska would have the same factors as the County of Hawaii and that is probably driving the size of government labor force."
In looking at the State, Young said the multi-island feature of Hawaii also contributes to the necessity of having more people doing work that other states can do with less people.
"We have courts on every major island in the state. ?But, we also have to have jails, prisons, probation officers, prosecutors, admin, etc. to support a multi-island court system, that if this were a mainland state or if all the counties were contiguous, there would be opportunities of scale and efficiencies."
Another example, would be the public school system, Young said, noting the state provides K-12 educational facilities to a large number of rural remote areas.
"We don't get the opportunity to mass populations for student enrollment. ?Some K-12 schools are providing to population areas less than 10,000 people.
There are a number of federal workers here because?Hawaii is the farthest outpost of the U.S. and there is a need for military defense and a federal court system.
?Just the fact that Hawaii is a strategic location for the military means that you would expect a higher concentration of military across all branches in Hawaii as opposed to, say, Idaho,? Young said.
Kalapa agrees many services in Hawaii are duplicated between the four county governments ? Oahu, Maui, Hawaii Island and Kauai ? and the state. Kalapa argues more services and departments can be consolidated.
?Why do we need a sheriff department and county police? Why do we need state and county transportation departments?" Kalapa asked.
The state is also one of the most centralized in the nation, especially when it comes to education. Hawaii has one state Board of Education and one Department of Education, but Kalapa notes that has not led to more efficiency, rather to more red tape.
Short URL: http://www.hawaiireporter.com/?p=294452
Author: Malia Zimmerman
Malia Zimmerman is the editor and co-founder of Hawaii Reporter. She has worked as a consultant and contributor to several dozen media outlets including ABC 20/20, FOX News, MSNBC, the Wall Street Journal, UPI and the Washington Times. Malia has been listed as one of the nation?s top "Web Proficients, Virtuosi, and Masters" and "Hawaii's new media thought leader" by http://www.thewebstersdictionary.com Reach her at Malia@hawaiireporter.com
Malia Zimmerman has written 436 articles for us.
Source: http://www.hawaiireporter.com/union-power-ensures-hawaii-has-hefty-government-labor-force/123
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