By Malia Zimmerman | Hawaii Reporter
HONOLULU – Hawaii has more government workers as a percentage of all workers than every state in the union save Alaska, a new poll by Gallup shows.
Nearly three out of every 10 employees – or 27.8 percent of employed adults in Hawaii – work in a federal, state or local government agency, according to the survey. Hawaii falls behind the District of Columbia, at 29.2 percent, and Alaska, 28 percent.
Driving the booming government payrolls are factors of geography, military strategy and the strength of unions here. Taxpayers in turn pay some of the highest rates in the country to support sprawling bureaucracies from the local level on up, and are on the hook for pension and health care debts for decades to come.
“The government and the public need to realize that desiring a program is like owning a pet,” Kalbert Young, the state director of Budget and Finance, said. “It should be entered into as a long-term commitment because it’s a relationship that cannot easily be stopped.”
Hawaii has about 65,000 state and local full-time employees, according to the most recent U.S. Census data, with a payroll of about $266 million. The state is home to more than 52,000 federal employees and retirees.
The high numbers are partly due to geography, said Young, who used to be finance director of Maui County.
That county has four islands in its jurisdiction, and there are duplicative positions on each.
“We have courts on every major island in the state,” Young said. “But we also have to have jails, prisons, probation officers, prosecutors, admin, etc. to support a multi-island court system.
“If this were a mainland state or if all the counties were contiguous, there would be opportunities of scale and efficiencies.”
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. But the state also has areas that are rural and remote, boosting the cost of providing services to these pockets of people.
There are a number of federal workers in Hawaii, the farthest outpost of the U.S., and there is a need for military defense and a federal court system.
There are 10 military installations in Hawaii, supported by more than 57,000 enlisted and civilian employees.
“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.
Lowell Kalapa, president of the Tax Foundation of Hawaii, sees another factor at work: the strength of public employee unions.
Union leaders help get lawmakers elected, and lawmakers reward them with pay increases, benefits much more generous than 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.”
Indeed, when former Gov. Linda Lingle cut the government workforce by 7 percent in 2009 and 10 percent in 2010 and furloughed others because of challenging economic times, the state’s public employees were in an uproar.
Agricultural inspectors claimed invasive species would take over the state. 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, compounding state government’s financial woes.
Elected in 2010, Gov. Neil Abercrombie hiked taxes and fees to restore many of the cuts made by Lingle.
Abercrombie has called for the state budget to increase by 8 percent, then 11 percent, over the next two years. The state teachers’ union has demanded he go further by restoring cuts to teachers’ salaries and giving them a pay increase to boot.
Any increase would put pressure on taxes, already among the highest in the nation.
Among the states, Hawaii has the highest income tax and the highest taxes on gasoline – as well as an across-the-board excise tax of 4 percent to 4.5 percent on all goods and services, including medicine and food.
Lawmakers want more.
In the current session, they are proposing tax increases on everything from plastic bags, pensions, alcohol, sales of all goods and services, gasoline, oil, bottled drinks, sugar and cigarettes.
Some lawmakers want to legalize gambling and marijuana use and tax those activities at 15 percent.
Hawaii’s big government payroll means even more money needs to be set aside for retiree benefits.
Connecticut and Illinois are ranked worst in the nation when it comes to taxpayer burdens from unfunded liabilities, but Hawaii is close behind, coming in as the third worst “sinkhole” state, according to an analysis by the Institute for Truth in Accounting.
“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, founder and CEO of the institute. “Furthermore, the State has set aside only 31 cents to pay for each dollar of retirement benefits promised.”
The institute estimates that as of 2011, every taxpayer would have to pony up $38,300 to cover state workers’ retirement costs, an increase from $32,700 in 2010.
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 into motion an aggressive plan to pay down the debt.
“Until you begin to address the generous benefits and the size of government, we will have this problem,” Kalapa said.
Contact Malia Zimmerman at [email protected].