HONOLULU (Reuters) – Hawaiian tourism, a keystone of the state's economy just starting to rebound from a long slump, is taking a new hit from a plunge in Japanese leisure travel after the devastating earthquake and tsunami there.

Visitor arrivals from Japan, Hawaii's second-largest tourist market outside of North America, dropped 86 percent on Friday immediately following the 9.0 temblor, said Mike McCartney, president and CEO of the Hawaii Tourism Authority.

Most of the cancellations came from group tourism, including business meetings and incentive travel.

"The visitor industry was just starting to gain momentum, but that momentum doesn't make up for the loss that businesses are feeling now," McCartney said.

The duration and depth of the post-earthquake drop-off

in Japanese travel remains to be seen, but it is expected to be significant, he told Reuters.

Some 1.2 million Japanese typically visit Hawaii each year, accounting for 18 percent of the Aloha state's tourism and $2 billion in annual revenues.

"Tourism keeps Hawaii moving, economically. We were relying heavily on Asia and the U.S. West," McCartney said, adding, "We're open for business, but first and foremost, we express our sympathy to the people of Japan."

Visitor arrivals from Japan actually crept slightly higher on Tuesday, the first uptick since the quake. But McCartney said this was likely a short-term blip attributed to travelers with prepaid tickets unwilling to forfeit their trips.

He said many Japanese, even those not directly affected by the disaster, could be expected to refrain from traveling for some time out of respect for victims of the tragedy.

Japanese visitor arrivals to Hawaii dropped nearly 16 percent a month after the 6.8 magnitude Kobe quake in January 1995 but by year's end were up nearly 13 percent compared to 1994 levels, the Tourism Authority said.

The latest disaster comes 10 months into a turnaround in Hawaii's tourist industry, which had been on the decline for nearly two years as the national economy suffered through its worst downturn in decades. The H1N1 swine flu epidemic of 2009 also took a heavy toll on travel to Hawaii.

Prior to last week's quake, hotel occupancy rates were in the 90 percent range statewide. This week, they are hovering in the mid- to upper-80-percent range, said Joseph Toy, president of Hospitality Advisors, an Oahu-based hotel consulting firm.

"When the earthquake hit, a lot of flights to Japan were canceled and people from Japan and the mainland were stranded here, so to speak," he said.

As for fears about the possibility of radioactive fallout from Japan's crippled reactors some 3,800 miles across the Pacific, McCartney said he has seen "no impact at all" on tourism so far.

(Editing by Steve Gorman and Jerry Norton)

ALBANY, New York (Reuters) – Claiming local school districts are playing "political games," New York's governor on Thursday defended his $1.5 billion cut to education spending.

Governor Andrew Cuomo's proposed cut in state aid to schools -- the largest in history -- is aimed at closing a $10 billion budget gap for the next fiscal year.

Cuomo told reporters on Thursday that his cuts average 2.7 percent per school district, and could be offset by rooting out inefficiencies, using reserve funds and lowering the salaries of superintendents.

"I know there is waste and abuse in the school districts; 2.7 percent in waste and abuse," Cuomo said after a private meeting with legislative leaders. "Districts say 'we don't have any.' I don't believe it."

Teachers' unions and school officials have attacked Cuomo's plan, saying that they've already made steep cuts in recent years, and that unfunded state mandates are driving up costs. Aid was cut by $1.4 billion in 2010 after being frozen in 2009. School districts have also assailed the governor's proposal to cap property tax increases.

Cuomo's comments came only hours after State Comptroller Tom DiNapoli released a report that found most school districts across the state could use their reserves to offset the proposed cuts. But he warned that the practice is a "one-time fix" and would only cover year-to-year cuts and not rising costs.

"Many school districts are going to have to tighten their belts another notch next year and beyond," DiNapoli said in a statement.

PAY CAPS AND MILLIONAIRE'S TAX

In addition to the cuts in aid, Cuomo has proposed a salary cap for school superintendents that would be based on total district enrollment, with a maximum salary of $175,000 per year. The highest-paid superintendent in New York currently makes about $386,000. The superintendent of the Buffalo School District told a reporter earlier this month that he would quit if the cap passes.

"This is not about teachers in a classroom. It is about less bureaucracy, less administrative overhead, less superintendent salary," Cuomo said. "The days where government can just throw money at the problem, raise more taxes and throw more money at the problem, are over."

The state Assembly is seeking a tax surcharge on New Yorkers who earn more than $1 million a year in order to restore $200 million to schools. The state Senate wants to put an additional $260 million toward school aid, in part by rejecting a Cuomo proposal to create $500 million in competitive grant programs for schools. Cuomo has said that he will not back the tax and that the grants are "essential."

Assembly Speaker Sheldon Silver deflected questions from reporters on Thursday, saying only that "what's important is that we all come to an agreement in the next two weeks," in time for the April 1 budget deadline.

Billy Easton, the executive director of the Alliance for Quality Education, a nonprofit group backed by teachers' unions, said that the governor's comments are insensitive to the plight of school districts faced with substantial cuts.

"Local schools are slashing programs and preparing pink slips for teachers; it's in the headlines of every paper statewide," he said. "Governor Cuomo is in denial when he says he can cut $1.5 billion from schools without hurting kids."

(Editing by Jan Paschal)

PHILADELPHIA (Reuters) – Camden, New Jersey, forced to lay off nearly half its police force in a dramatic austerity measure at the start of the year, said on Thursday it will rehire nearly a third of the officers who were let go.

The city can partially rebuild its police force thanks to an infusion of $2.5 million arranged with New Jersey Governor Chris Christie, Mayor Dana Redd said in a statement.

Fifty of the 168 police officers laid off in January will be rehired, she said.

Camden is one of the nation's most impoverished cities and often ranks among the most dangerous and crime-ridden as well.

Also being rehired are 15 of 67 firefighters who were laid off, the mayor said.

The layoffs came in an effort to bridge the city's $26.5 million budget gap.

A city of about 80,000 people across the Delaware River from Philadelphia, Camden was once a thriving manufacturing town. But since 1960s, big factories have closed, taking jobs and leaving little tax base for the city's coffers.

The $2.5 million stems from an agreement for Camden to get funds in lieu of property taxes from the South Jersey Port Corp., a state agency which owns a large chunk of tax-exempt property in the city.

(Reporting by Dave Warner; Editing by Ellen Wulfhorst and Jerry Norton)