Police raises may bind state as HGEA talks begin

By Gordon Y.K. Pang
Advertiser Capitol Bureau

The raises granted recently to police officers could loom large when talks begin today between state labor negotiators and the union representing more than 23,000 white-collar state and city employees.

The settlement for members of the State of Hawaii Organization of Police Officers announced last week amounts to a pay raise of about 4 percent in each of the next four years.

Because those increases were reached through binding arbitration, government negotiators are worried they will create a ripple effect that leads to similar wage increases for the Hawai'i Government Employees Association, and possibly others, which could cost taxpayers tens of millions of dollars.

Ted Hong, the state's chief labor negotiator, said preliminary estimates put the price tag of a 4 percent pay increase for HGEA members at between $30 million and $40 million annually.

The upcoming stream of government worker negotiations also brings back into the spotlight the state's controversial binding arbitration process that takes away the unions' right to strike in exchange for a mechanism that critics believe virtually assures unions of pay raises for their members.

Last session, the Legislature restored binding arbitration for the remaining six HGEA units, but only after Democrats united to override a veto by Gov. Linda Lingle.

Hong noted that the unions representing the firefighters and state hospital nurses also have received similar raises through arbitrated settlements this year, making it a strong possibility that binding arbitration with HGEA units would include pay increases.

"Obviously, the question is if we go to binding arbitration, will that same percentage apply to HGEA members?" Hong said. "Obviously, we hope it doesn't ... only because of the massive amount of workers involved and the tens of millions of dollars it will cost to make that happen."

Among the 10 factors an arbitration panel is expected to weigh in binding arbitration are a "comparison of wages, hours, and conditions of employment of the employees involved in the arbitration proceeding with the wages, hours, and conditions of employment of other persons performing similar services, and of other state and county employees of Hawai'i."

But any wage increase for state and county employees may not stop with the HGEA's binding arbitration. A stipulation in the contracts for United Public Workers' two units, totaling roughly 12,000 state and county employees, allows a reopener on wages if HGEA workers get raises.

Other major government workers, chiefly the Hawai'i State Teachers Association and the University of Hawai'i Professional Assembly, also are seeking audiences with Hong and his staff to discuss wages between now and the close of the Legislature in the spring.

Those two unions last spring agreed to partial settlements, but deferred for a year the issue of wages and salaries in recognition of the state's financial straits. The UPW reached its extension agreement along similar lines.

Former Gov. Ben Cayetano, a vocal opponent of binding arbitration, said Hong's concern is legitimate.

"The first binding arbitration award usually sets the minimum the other unions, even those which are not under binding arbitration, will shoot for," he said.Ê"It is difficult, politically, for union leaders to tell their members to forgo their pay raises in order that social programs can be funded — while the members of another union are awarded a pay raise."

But Randy Perreira, HGEA deputy executive director, downplayed the impact that arbitrated contracts received by others has on his team's bargaining strategy.

"We are well aware of all of the arbitration decisions that have been rendered recently and we take into account a variety of factors including that, but at this point in time, our hope is just to see what kind of wage offer the employers might be willing to make, and we begin negotiations from there," he said.

Equally important, if not more so, is the state Council on Revenues' recent rosy projections for the state's budget picture, Perreira said, noting that economic conditions and the employers' ability to pay also are major factors used to determine pay increases.

Management types, however, criticize the binding arbitration process for failing to consider seriously their ability to pay for the increases.

Honolulu Mayor Jeremy Harris said the city will need to raise gasoline or vehicle weight taxes, cut departmental budgets, or a combination of both, to pay for raises this year.

"The arbitration panel, while they're supposed to take ability to pay into consideration, repeatedly do not," Harris said. "They're of the philosophy that we can infinitely raise taxes and pay for any reward, and therefore ability to pay is never an issue ... and I think that's clearly not what the law intends."

Cayetano, like Harris, was a proponent of binding arbitration after the HGEA strike of 1994, but has grown to despise it and helped to spearhead its repeal in 2001 for all government workers except police, firefighters and nurses.

"I found it outrageous to be compelled to cut state programs — particularly social service programs —Êin order toÊpay for pay raises and increased benefits," he said.

Hong and Lingle said arbitrators have a tendency to split the difference between management and the union, thereby almost always ensuring wage increases for employees that the state and counties cannot afford. Hong said that only once in the past few decades has a binding arbitration panel gone entirely with management.

Union supporters counter that management loses because it is not able to formulate a good case for its positions.

Perreira said that it is beneficial for the public to have HGEA subject to binding arbitration. The union does represent a number of essential government workers from police dispatch operators to lifeguards.

"In addition, I think our members are the ones that provide the daily services that the public counts on," he said. "And any time you have a contract dispute that would result in the disruption of services, it places an unfair burden on the general public. Binding arbitration is what we consider to be the modern way to resolve disputes without having to consider a strike."

Hong believes that when a strike is the ultimate outcome of an impasse, both sides are more focused on finding a settlement.

Binding arbitration, he said, "actually absolves people from having to seriously engage in negotiations because you don't care. You have nothing to lose as a union member."

But William Puette, the director for the Center for Labor Education and Research at the University of Hawai'i at West O'ahu, said binding arbitration acts as an equalizer for government unions, which are at a disadvantage if the outcome of an impasse is a strike.

Because governments rely primarily on taxes to function, there is less pressure for them to settle a strike, he said.

"The problem with the public sector ... is the employer continues to take in money during a strike and they don't suffer. A third party, the public, suffers," Puette said.

A government "may be willing to accept the political damage" from an outraged public in the event of a strike, he said, as long as the economic consequences are minimal.

Hong said Puette's reasoning fails to consider the political ramifications that may occur, or that government exists to serve the public.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or at 525-8070.

Correction: The partial labor contract settlement between the state and the University of Hawai'i Professional Assembly runs through June 30, 2005. An incorrect year was given in a chart with a previous version of this story.