The Lingle administration made an offer to public-sector labor unions yesterday that includes a combination of pay cuts and furloughs to help with the state's budget deficit, but the state's chief labor negotiator would not disclose the details.

The administration met with the leaders of the Hawai'i Government Employees Association, the Hawai'i State Teachers Association and the University of Hawai'i Professional Assembly at the state Capitol. The leader of the United Public Workers was on the Mainland and could not attend.

Sources familiar with the talks, speaking on condition of anonymity because the negotiations are confidential, said the administration's offer involves a 7 percent pay cut and about 18 furlough days a year for two years. The administration's proposal is in response to a union offer last week of a 5 percent pay cut. The combination pay cut and 1 1/2 furlough days a month would save the state roughly the same amount of money as Gov. Linda Lingle's initial goal of three furlough days a month.

"It was a very productive meeting and substantive discussions did occur, so we're very pleased," said Marie Laderta, the director of the state Department of Human Resources Development, who would not discuss the contents of the negotiations.

Laderta said no further contract talks have been scheduled, but the parties remain on call. Union leaders left the meeting in the governor's office by private elevator without speaking to the news media.

In a related development, an arbitrator ruled on Monday that the terms of the six-year contract between UHPA and the University of Hawai'i remain in place. The faculty union had filed a grievance against the university because the contract has a provision preserving the current language if the two sides bargain but do not reach agreement on renewal before June 30. The contract also has a no strike or lockout provision.

"So the contract is still in force. For us, it's good to have that knowledge and that certainty," UH President David McClain said.

McClain, however, said there are now questions about how long the contract can be extended. "If it's not over, when is it over?" he asked.

Contracts for the HGEA, the HSTA and the UPW, which were also to expire at the end of June, remain in effect during negotiations with the state.

MAYORS CANCEL

County mayors had wanted to attend yesterday's contract talks but canceled after uncertainty about whether there was time for a full briefing on the governor's proposal before the meeting. Representatives from the state Department of Education, UH, the Judiciary and the Hawai'i Health Systems Corp. attended the negotiations.

After a Circuit Court judge ruled this month that furloughs are subject to collective bargaining, Lingle and the unions have negotiated potential pay cuts and furloughs while the governor has also moved forward on possible layoffs for 1,100 state workers.

The Lingle administration, which must consult with unions on layoffs, has said that civil-service protections make it difficult to estimate how much money the state will save through layoffs. The administration also did not provide seniority information about the workers on the layoff list, which is needed to determine bumping rights, the ability of senior workers to bump more junior colleagues to avoid being laid off.

Lingle has said she prefers furloughs to layoffs.

REACTIONS VARY

Jim Shon, a former state lawmaker and charter school administrator, said it appeared to him that the layoff list was a negotiating tactic by the administration.

"They didn't know how much it would save or where it fits in with the overall deficit picture," he said. "It seems like it was just thrown on the table."

Shon said he continues to believe it will take a combination of approaches — pay cuts, furloughs, diverting money from special funds, and possibly a general-excise tax increase — to close the deficit. He suggested that a GET increase could be used to offset spending cuts to public education.

Shon also said he has detected some anger from rank-and-file state workers about union leadership and the direction of contract talks.

Jonah Ka'auwai, chairman of the Hawai'i Republican Party and a former state corrections administrator, said he has heard from several state workers who would prefer furloughs to layoffs to help with a $786 million deficit through June 2011.

Ka'auwai said he believes 1,100 layoffs could just be the beginning and said some departments, such as the state Department of Public Safety, are talking about closing entire facilities. "In my determination, it's not politics," he said of the governor's layoff announcement.

"She is just taking her role as the fiscal officer of the state and starting to implement the needed cost reduction in order to get this taken care of."