Gov. Linda Lingle asked lawmakers yesterday to back $278 million in wage and benefit cuts for state workers to avoid massive layoffs and tax increases as she deals with the budget deficit.

The governor, in her first personal appearance before lawmakers this session, told the Senate Ways and Means Committee that pay cuts are the best way to minimize damage to the economy.

"If we are able to realize this savings, we avoid having to undertake massive layoffs or tax increases. Achieving both of these results, in my opinion, are vital to stabilizing our economy and setting the stage for our recovery," she said.

While Lingle has spoken about difficult choices in the context of the budget, yesterday was the first time she presented the options in such stark terms.

"Mass layoffs of our state employees now, or of county employees next year, when the full force of property tax value declines will result in dramatically reduced property tax collections, will add to our currently higher than usual unemployment as well as increase substantially the personal, family and community tragedy that accompanies such job losses.

"Any excise tax increase at this time will also damage the economy and prolong the time it takes to recover. Higher taxes will be the straw that breaks the back of many local businesses, and their demise will drive unemployment even higher."

Lingle said it is unlikely that negotiations with public-sector labor unions will finish by the time the session ends in early May, meaning lawmakers would go home without knowing if the plan to close the budget deficit would work.

Lingle asked lawmakers to accept her assumptions on labor as part of their two-year budget plan and put the burden on her administration to achieve the cuts. The governor said that if the unions do not agree to concessions, she could find the savings through a combination of furloughs of state workers and other spending restrictions.

MANY 'LOOSE ENDS'

Senators reacted coolly to the governor's suggestion that they essentially trust her to manage a $278 million hole in the budget. While it is possible labor talks might finish by the end of the session, the governor said it could be late summer or the end of the year before the negotiations are complete because of the potential for binding arbitration or strikes. Such a scenario would mean the governor would have the discretion to find the savings without much public or legislative input.

Lingle does have the power under state law to administer the budget once it is passed by the Legislature, but it is unusual, lawmakers say, for the governor to ask lawmakers in advance to accept her assumptions and leave her free to find alternatives if they collapse.

"There's just too many unanswered questions, too many loose ends at this point, for us to give up our policymaking responsibility," state Sen. Donna Mercado Kim, D-14th (Halawa, Moanalua, Kamehameha Heights), the chairwoman of the Senate Ways and Means Committee, said afterward.

The Senate will have its draft of the budget ready in the next two weeks. The draft will be sent back to the House and then House and Senate lawmakers will meet in conference committee on a final draft. The House version of the budget uses a combination of spending cuts, program reductions, tax increases and 374 layoffs of state workers to close the deficit.

Roger Takabayashi, president of the Hawai'i State Teachers Association, said he doubts lawmakers can do what the governor is asking. In addition, he questions whether county mayors will go along as well. At least one of the county mayors would have to agree with the governor's labor savings — under the way votes are weighted in labor talks — and the mayors have not taken a position pending further detail.

"I think it would be irresponsible for them to do that," Takabayashi said of lawmakers. "It would be like negotiating away from the bargaining table."

SHARED SACRIFICE

Lingle was critical yesterday of information released by the Hawai'i Government Employees Association over the weekend that described potential wage cuts of 4.5 percent to 22 percent. The governor called the 22 percent figure "flat-out false" but said she is prevented by collective bargaining rules from discussing the details of the state's offers.

Lingle said state workers received pay raises when the state had a surplus and the economy was strong and now must share in the sacrifice during a recession. She also said she would back wage cuts for her administration executives under a bill that — as written now — would freeze the pay of state administrators, judges and lawmakers through 2011.

If lawmakers were to agree, she said, the $278 million in labor savings over two years would be taken out of the state Department of Budget and Finance. After the labor negotiations are complete, the budget office would then apply the savings to individual departments. If labor talks failed to produce the $278 million in savings, the administration would have to find the money elsewhere, possibly through furloughs.

Lingle said the threshold question for lawmakers is whether they believe labor savings should be part of the discussion in closing the deficit. She said her goal is not ideological — to force down the wages and benefits of state workers — but a practical attempt to close the shortfall without layoffs or tax increases.

"This is the last thing that I want to do ... I know that our employees have financial commitments based on how much money they earn," she said. "But my bigger concern was not to have to move to mass layoffs, not to have to move to tax increases."