Restoring Furloughs To Cost State of Hawaii More Than $160 Million

About 20 percent of the increase in next year's state budget is tied to the cost of putting people back to work on furlough days.

As part of the $11 billion operating budget lawmakers approved for the 2012 fiscal year, $251 million will fund increased labor costs when twice-a-month furloughs end June 30. The overall budget for the fiscal year that begins July 1 is $800 million bigger than this year's base budget.

That $251 million includes two increased costs stemming from furlough days: salaries and pensions. However, the state expects to achieve $88 million in labor savings in contract negotiations, which would mean a net increase from restoring furloughs of $163 million.

Because furloughs were unpaid work days, they resulted in about a 10 percent pay cut for affected employees. Restoring that pay will also increase the amount of retirement benefits the state owes employees because contributions are calculated as a percentage of payroll.

If the $251 million gross increase were spread evenly across all state employees, restoring furloughs would come out to about $5,600 for every employee next year. If the labor concessions are achieved, the furloughs will cost about $3,600.

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