Council on Revenues: " Look out below! "

The dark wizards of the Council on Revenues, meeting last May, murmuring incantations and waving their hands over a crystal ball while dry ice filled the room, revised their tax revenue forecast yet again, and yet again they revised it to be darker and more ominous than before. "Economo confundis!" They confounded the governor and the legislature, whom they had previously told that revenues would be merely miserable, by changing their minds and forecasting that revenues would end the fiscal year down 9%, and that in the next fiscal year, beginning July 1, there would be 0% rebounding. Governor Lingle had already done all the "easy" stuff like curbing state travel and cutting executive salaries and reducing discretionary spending. Over the next several weeks she cut executive pay more, including her own, put non-union employees on rolling furloughs, and tried doing the same with union employees. The unions successfully blocked that, finding a sympathetic judge to say the furloughs needed to be negotiated with the employees' first. At the same time, they said that, providing there were indeed negotiations, they were warm to the idea of furloughs if it minimized actual layoffs. But the contract talks moved very slowly, with both sides accusing the other of stalling, even after the governor issued actual layoff notices. The talks seemed headed for binding arbitration, which in the past has been good for the employees, yielding bigger raises than most private sector citizens have gotten. But the whole situation changed Thursday when the economic seers of the Council on Revenues met once again and once again revised their forecast downward. Now 0% rebounding looks like the good old days. Now the council predicts that the current fiscal year will see a further 1.5% decline in tax revenues. If the smarties are right, the state budget crisis just got almost $100 million worse. The alarming thing about this is that the crisis was already getting worse simply because the contract talks were so slow. Every day without a contract agreement including wage reductions and/or rolling furloughs has been another day the state budget deficit gets worse, increasing the probability that the ultimate solutions will have to be more draconian. This is not a temporary crisis that can be waited out. It is a calamity that will be with us for two more years at least. It will be longer than that before the economy returns to the levels of 2007. If no contract agreements are reached soon, the matter goes to an arbitrator in a little over a week. Postscript Something good has happened. Governor Lingle and HGEA have exchanged fresh contract proposals. On its website Friday morning, HGEA said the governor has for the first time backed off her original numbers for furlough days, so the union responded by moving off its own previous proposal. Details are facedown as they should be at this stage of contract negotiations, but it does no harm to report that the two sides are both looking to rely on rolling furloughs to avoid, if possible, more painful options.

Comments

[Gary]

Where do you get your information about arbitration awards? I'm a state employee, and married to someone who works for a bank (and have many friends who work in the private sector), and over the past decade, I certainly never received a raise larger than any of them. Six years ago, the arbitrator awarded ZERO in the first year; and then 5 percent, effective Jan. 1, which was six months into the second year of the contract. The next contract period, we received 3.5 percent and 3.5 percent for both years, starting Oct. 1 (again 3 months after the contract period began). You must remember that this took place when the economy was sound. Two years ago we reached a settlement with the employers during the arbitration hearing. Having said all of this -- no one goes into public service for the money. I surely didn't. But I was willing to take a lesser paying job in the public sector for the security and benefits that was offered. BTW, it's unfair to say the unions "found" a sympathetic judge. Judge Sakamoto was one who could clearly see the governor was breaking the law by not NEGOTIATING furloughs. The union was never opposed to it, and now I'm glad we are NEGOTIATING this issue.

[I was comparing state worker raises with private sector raises over a longer period of time. It is telling that your specific comparison was to banking, another line of work where raises tend to be so nice.

It is not unfair to say a sympathetic judge was found, because the unions filed several different motions that went to different judges.

I commend you for your avowal that there is more to public service than mere compensation, and indeed there are many state employees who feel that way, and good for them. HMD]

[Michael]

Quicksand!