In what all sides described as progress, public-sector labor unions yesterday offered to take a 5 percent pay cut to help close the state's budget deficit, far less than what Gov. Linda Lingle has wanted but a sign that state workers are willing to sacrifice.

Lingle, who had previously said the state would not come back to the bargaining table until the unions made a formal offer, attended the labor talks yesterday at the state Department of Human Resources Development.

The governor said afterward that the state would consider the unions' proposals.

Randy Perreira, executive director of the Hawaii Government Employees Association, said the unions submitted formal and informal offers to achieve what he described as "very real salary savings."

Details of the negotiations are confidential, but sources said the 5 percent pay cut was part of the informal offer and could be achieved through a salary reduction or furloughs.

Last month, Lingle ordered state workers to take three furlough days a month for two years, which is equivalent to a 13.8 percent pay cut. A Circuit Court judge ruled this month that furloughs should be the subject of collective bargaining.

"Our members are willing, as we've said all along, to make a sacrifice," Perreira said. "The sacrifice we put on the table is the same sacrifice that legislators have made, the same sacrifice that the governor and her Cabinet have made to date, the same sacrifice that the mayors and their respective Cabinet members have made."

Lingle has signed a bill into law that imposes a 5 percent pay cut and freezes the salaries of the governor, lieutenant governor, judges, department directors and state lawmakers through June 2011. Honolulu Mayor Mufi Hannemann, his Cabinet and his department directors also took a 5 percent pay cut.

"Basically, we're taking the position that this is a situation in which we're all going to share equally, and it's fair to have the employees put in, if you will, the same as their bosses have, and that's what we're looking to do," Perreira said.

Lingle has said she wants to realize $688 million in labor savings to help with a $786 million budget deficit through June 2011. A 5 percent pay cut for the state's 46,000 workers would only achieve about a third of the amount the governor wants to save.

UNION SUGGESTIONS

Union leaders have suggested that the governor and lawmakers use money from the state's hurricane relief fund and rainy day fund and consider temporarily raising the general-excise tax to close the gap.

Labor talks between the unions and the state have been stalled because Lingle has said her administration did not want to come to the table unless the unions made a formal offer.

Marie Laderta, the governor's chief labor negotiator, was scheduled to meet yesterday morning with the HGEA and the United Public Workers to discuss furlough plans in the wake of the court ruling.

The leaders of all four unions — HGEA, UPW, the Hawai'i State Teachers Association and the University of Hawai'i Professional Assembly — arrived for the talks.

All four county mayors and representatives from the state Department of Education, the University of Hawai'i, the Hawai'i Health Systems Corp., and the judiciary also attended.

Lingle, informed that a formal proposal was being submitted by the unions, arrived about an hour into the talks.

Over the past few days, Lingle and the mayors, particularly Hannemann, had differed over the purpose and scope of the meeting. The governor and her staff said it was called by the state to talk with the HGEA and UPW about furloughs, and that the unions were free to also use the opportunity to make a formal offer. The mayors said it was the "starting point" for a pact after they and the state agencies had reached an agreement in principle on a framework for negotiations.

Honolulu Mayor Mufi Hannemann said the stalemate had been broken by yesterday's talks.

"We're pleased that the stalemate has been broken," Hannemann said. "We've insisted all along that now it was the time for the principals to come to the table. We're pleased that the governor finally came to the table. We're pleased that the unions put a proposal on the record on the table. And there's still some massaging that needs to be done, but clearly now the principals are involved, across the board."

Under state labor law, the governor must get the votes of a mayor, educator, chief justice or hospital administrator to make contract offers to the different bargaining units of the unions.

Lingle stressed yesterday that the state — the DOE, UH, HHSC and the judiciary — was united, suggesting she would not be isolated by the mayors.

"We are a united state employer group, and we're going to go back and work as quickly as we can on what we received," Lingle said.