Over the past year, the severe fall off of tourists to the Big Island has lowered income to local businesses and more than doubled the rate of unemployment. Unfortunately, starting July 1 Hawaii County will begin to experience additional economic shrinkage due to severe cutbacks in State and County wages, benefits, and spending.
3,450 Hawaii State employees on the Big Island will have their salary’s cut by 15%. Assuming an average salary of $40,000, the loss to Hawaii County’s economy will be $20.7 million a year or $1.725 million each month no longer being spent by Hawaii county residents.
An additional 5,550 State employees work for the Department of Education (DOE) and University of Hawaii at Hilo (UHH) on the Big Island. UHH has been told their $50 million yearly budget has been cut by at least $4 million. The DOE has been told it must cut $384 million State-wide over two years or $192 million a year.
The DOE and UHH budget cuts could be dealt with by giving all employees a 14% decrease in salary similar to the other State employees. Neither UH or DOE have decided whether to take the salary cut approach that other State employees face or make the cuts by doing layoffs, ending programs, and increasing class sizes. But the loss to Hawaii County can be estimated by calculating a 14% cut in salary for each of the 5,550 DOE and UHH employees on the Big Island. Assuming an average salary of $40,000 the yearly shrinkage to the county comes to $31million or $2.59 million a month.
Hawaii county is meeting their budget cut by reducing the salary’s of appointed staff in the mayor’s office for one day a month and un-funding 55 vacant county positions. County salary shrinkage totals a tiny $41,714 a year equivalent to the 15% salary cuts of just 7 State employees.
In addition to salary cuts through furloughs, the 11,750 State and County workers as well as some retirees on the Big Island face a medical premium increase of 24 percent this summer. For a family medical plan, it could increase the monthly payments by an additional $500 each month. This adds up to $70.5 million dollars that residents in Hawaii County no longer have to spend each year.
Totaled together, the loss of income to Hawaii County’s residents is a staggering $10 million a month or $120 million a year.