A prolonged budget stalemate in Washington could mean furloughs and even layoffs of state workers in Hawaii, Gov. Neil Abercrombie said.
That's why he's proposing a $25 million contingency fund to help cover the expected loss of federal funding under the automatic federal budget cuts.
"We think that gives us at least a solid financial foundation to be able to direct our attention ... towards the effect of the sequester," he said.
The governor also said he will convene a special response team to deal with the budget issues. Team will include cabinet members, Hawaii's Congressional delegation and military and business leaders.
The so-called sequestration cuts are expected to cost the state $25 million to $35 million a year in federal grants.
The impact on the military and its civilian workforce will be even more severe.
The governor said that furloughs of the state's 19,000 nonmilitary DOD workers could mean the loss of $138 million in income during the six months ending in September.
"I think it will affect local business. It will obviously affect donations to charities and those who are supporting nonprofit organization that they are partial to," Abercrombie said.
The governor said he's hopeful that a budget deal can be reached in Washington before the furloughs begin in April.
In the meantime, he says the state is taking steps to weather the financial storm.