State warns against raises

By Gordon Y.K. Pang
Advertiser Capitol Bureau

The multimillion dollar question at the State Capitol this month is how much some 23,000 members of the Hawai'i Government Employees Association will get in raises when a three-member arbitration panel releases its binding decision on Tuesday.

"Under a worst-case scenario, the reductions to services, and maybe some programs, may not be pretty," Kawamura said.

The state position calls for no pay raises in the current fiscal year, which ends June 30, and a 1 percent increase next year.

Union officials believe the state has the ability to pay the raises they want and are exaggerating the impacts.

"I rely on the employers' numbers," Russell Okata, HGEA executive director said. "I mean they have the books and they don't give us access to their books. But I don't know if her numbers are credible."

The state failed to persuade arbitrators when it made similar arguments about inability to pay during proceedings with unions representing police officers, firefighters and nurses, Okata said.

"It's a ploy," he said. "They're trying to scare the public, scare the arbitrators."

The arbitration panel heard arguments during seven days in January from HGEA and state negotiators after they failed to reach an agreement on wages by the end of last year. The panel consists of Larry Ishimi, an HGEA staff member; Mike Ben, personnel director for Hawai'i County; and Catherine Harris, an "independent arbitrator" from the Mainland.

Harris is the swing vote between the union and government factions.

Kawamura said her big fear is that if the HGEA employees get what they ask, the three other unions with unresolved pay issues will argue that they should get similar, or higher, raises.

The Hawai'i State Teachers Association began negotiations on pay issues this past week. The University of Hawai'i Professional Assembly, which has scheduled a strike vote for the end of the month, is slated to meet with state negotiators and a federal mediator this week.

The United Public Workers' Unit 1 has a contract but it stipulates that any pay raises given to HGEA members will allow for a reopening of its contract to discuss raises.

Kawamura estimated that if the HGEA's position also is applied to three other bargaining units — which represent a collective 25,000 other state and county workers — that are seeking wage and salary increases, it could cost $96.4 million out of the state general fund from next year onward.

Such an added cost could have a dramatic impact on the $3.9 billion general fund this year and next year, Kawamura said. State agency chiefs have already been asked to submit reports showing where cuts could be made in the event they are forced to pare back discretionary funding by 1 percent, 3 percent and 5 percent.

And since more than 82 percent of the budget consists of nondiscretionary costs such as debt service, fringe benefits and federal mandates such as the Felix Consent Decree and No Child Left Behind, even a 5 percent cut would net no more than $35 million, only a portion of what the state may need, Kawamura said.

Human services and health programs, typically considered discretionary funding, may be in the most danger, she said. "Unfortunately, it may impact those that need it the most, and that may be the young, the frail and the elderly."

But Okada said the union has been able to demonstrate that the state's economic conditions have improved measurably.

"Just look at tax revenues, employment, tourism arrivals." Okata said. "The hotels are doing gangbusters."

The state Council on Revenues, which makes the projections on which lawmakers must base their budget, have continued to issue strong economic forecasts for the next several years.

"We're very comfortable the state will be able to generate enough revenue to pay not only the arbitrated (HGEA) decision, but the three negotiated ones," said Joan Husted, executive director of the Hawai'i teachers union.

Husted, who has been in Hawai'i labor negotiations since 1971, added: "Traditionally, employers are always very conservative and then, when we're done bargaining, all the money starts coming in."

With the House now done with the budget, it will be up to the Senate to work with Kawamura on coping with the fiscal impacts of employee raises.

Senate Ways and Means Chairman Brian Taniguchi has asked Kawamura to talk to his committee on Wednesday, the day after the HGEA arbitration decision is announced.

"We have to plan our budget based on worst-case scenario," Taniguchi, D-10th (Manoa, McCully), said. "And if it's not as bad, you'll have room to do other things. But unless you cut that initial space, you're going to have a hard time."

Several House Finance Committee members criticized Kawamura last week for not setting aside any money in her supplemental budget to help pay for any potential pay raises, and for failing to provide them last week with any details on how much agencies would need to cut if the HGEA receives what it sought.

But Kawamura and state Chief Negotiator Ted Hong said they don't want to offer specifics that the unions can use to their advantage.

Finance Chairman Dwight Takamine, D-1st (N. Hilo, Hamakua, N. Kohala), said while he would have liked to have seen more specifics, he's heartened by assurances by Kawamura that her office will present details about cuts in services when the contracts are settled.

Kawamura and Hong said the state would not be scrambling to settle four major labor contracts more than halfway through the legislative session if lawmakers had not approved a bill last year that restored binding arbitration for impasses in negotiations involving HGEA units.

"The other unions are not really, seriously negotiating because many of them are just waiting to see what the arbitrators' decision is," Kawamura said. "This sets the tone for the others."

Husted took exception to that concept, stating that her union has been ready to bargain since January and that it has been the state that has postponed going to the bargaining table.

If not for the binding arbitration law, Okata said, "perhaps HGEA would be taking a strike vote right now."

Kawamura's projections reflect only the potential impacts to the state and not the four counties.

Honolulu Mayor Jeremy Harris said that if the HGEA receives what it asks for, it would cost the city $6 million in the first year, $14 million in the second year and beyond.

Harris has recommended that the City Council reject any pay increases for HGEA employees. "I don't believe when we are raising taxes on hotel, resort and commercial properties to balance the budget, and in a year when we're raising (residential) taxes, that we should be paying raises," he said.

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