A settlement is expected soon between the state and the Hawaii Government Employees Association that would result in furloughs for state employees but not necessarily stave off layoffs, Gov. Linda Lingle and HGEA executive director Randy Perreira said yesterday.

The two sides will work on specifics over the weekend with a tentative agreement expected to be offered to the HGEA's 23,000 state and county workers for a ratification vote sometime next week.

In June, Lingle ordered state workers to take three days a month in furloughs for the next two years, equivalent to a 13.8 percent pay cut, to help make up for a budget shortfall caused by a drop in tax revenue. But the HGEA took Lingle to court and was able to stop her from implementing the plan. The court said Lingle's unilateral furlough plan was unconstitutional and should be subject to collective bargaining.

"We never necessarily objected to the state's furlough plan," Perreira said yesterday. "What's been in contention all along is the amount."

Last week the state teachers union, which represents 13,000 members, agreed to 17 furlough days a year for most teachers, which amounts to a 7.9 percent pay cut.

The state and HGEA have been in binding arbitration to settle their separate contract dispute. The arbitration was scheduled to continue until December. Both sides have said they would prefer to settle the issue outside of the arbitration process.

"It's certainly possible that we get it this weekend," Lingle told reporters at the state Capitol yesterday morning. "We're that close. We'll just have to wait and see how this plays out."

"We are very hopeful that we will be able to come to an agreement shortly and of course at that time more details will be offered," Perreira said a press conference yesterday afternoon. "Because we are at a sensitive point, we're not going to discuss any of the particulars at this time."

Both parties said there was one key point that needed to be settled between the state and the union. Neither would disclose the issue, although Perreira said it did not have to do with contributions to the employee health fund, a sticking point in the past.

"We need to resolve the issue and to get the mayors on board," Lingle said, noting that at least one of the four counties must also OK a settlement. Honolulu Mayor Mufi Hannemann and Maui Mayor Charmaine Tavares were in Seattle attending a U.S. mayors' conference yesterday.

Language on several cost issues still need to be hashed out, but "they're not deal breakers by any stretch of the imagination," Hannemann said by phone yesterday.

Hannemann said he expects a settlement to be hammered out early next week, even if he or other mayors may be out of state.

LAYOFFS POSSIBLE

After Lingle's plan to furlough workers was stopped by the courts, she said she would have to lay off 1,100 state workers.

Union negotiators "want to forestall people being laid off," Perreira said yesterday.

The state "has made no commitment to stop the process" of the first round of layoffs, Perreira said.

As for layoffs beyond the first round, Perreira said: "The governor has the authority to lay people off. We would certainly hope that because our employees are willing to make (financial sacrifices) she won't take that extraordinary step."

Lingle indicated that the first round of layoffs would need to be carried out but said it was premature to be discussing a second round when negotiations were ongoing.

The governor said the proposed settlement "would mean that future layoffs would not have to be as severe because we've had labor savings from furlough days."

$1 BILLION SHORTFALL

The state is attempting to meet a $1 billion shortfall in the state general fund in the 2010-11 fiscal biennium that's been caused largely by the poor economy.

The teacher furloughs were approved by members of the Hawaii State Teachers Association last week and will result in schools shutting down on 17 Fridays, but no layoffs.

Lingle said that she, like others, would have preferred a straight pay reduction for teachers. "But the union had to negotiate for what it felt it could get from a vote of its members, and I suppose that's what the Department of Education had to consider," she said.

Lingle said the state has not had any recent talks with leaders of another state worker union, the United Public Workers, which represents primarily blue-collar state and county workers.

As for HGEA, it was the union leadership that decided to step up the negotiation discussions and "reach out to the employers," Perreira said.

"Our negotiators ... had come to realize that we are at a point where, for the sake of certainty for our members, and in acknowledgement of the situation that the state's budget is in and the continuing problems with the economy, we felt it was time to reach a conclusion where our members would have a say ... and we would conduct a vote," Perreira said.