Posted on: Friday, June 3, 2005

ISLAND VOICES

By Rep. Galen Fox

Following a decade of economic stagnation under her Democratic predecessors, Linda Lingle took office, proclaimed Hawai'i "open for business" and ushered in Hawai'i's new prosperity. The remarkable improvements under way in my Waikiki district testify to this.

Outrigger Enterprises is beginning a $460 million project to redo rundown Lewers Street. Called Waikiki Beach Walk, the Outrigger project will feature retail shops, restaurants, water features, stone walkways and more to attract residents and visitors alike. The International Market Place will get a $150 million makeover after decades of decline, renewing the open-air market while preserving the grand, century-old banyan tree.

These are just two of several major Waikiki improvements, all paid for by the private sector, and all bringing jobs and new revenue to the state.

Gov. Lingle's policies, in Waikiki and elsewhere, to encourage job creation and generate new tax revenue should mean more money for state priorities like schools, affordable housing, roads, harbors, airports and prisons, expanded healthcare, low-income tax relief, and preserving our 'aina.

Unfortunately, the state Legislature's commitment to government worker pay increases, a worthy objective among many, overrides every other proposed state revenue use. Our immediate problem is the way the large Hawai'i Government Employee Association arbitrated pay settlements set the standard for every other union. Gov. Ben Cayetano felt so strongly about how HGEA-arbitrated pay settlements hurt Hawai'i that he called ending the practice his administration's top achievement.

Too bad Cayetano's signature achievement quickly died. Over Gov. Lingle's veto, Democratic legislators in 2003 restored the HGEA's right to arbitrated settlements.

So with arbitration restored, the HGEA won this spring when an arbitrator gave its members pay increases of 10 percent over two years. The settlement created a big problem, for, as an April 12 Advertiser editorial noted, "arbitration doesn't balance state needs." The arbitrator "is not obliged" to consider "the state's total financial condition," or how his award "will affect other public worker negotiations."

Gov. Lingle agrees. "The absorption of virtually all revenue growth by these pay and benefit increases ... means that our infrastructure will continue to deteriorate, and we won't have the money we should for our needy, our schools, our harbors, our airports, our environment, new programs and initiatives, and we don't have the money we should to help those of our citizens who do not work for the state."

How severely have arbitrator-dictated wage increases, made without regard to the state's other needs, reduced state revenues? Over the past 10 years, state general fund revenue increases totaled $1 billion, but wage-and-benefit collective bargaining increases in the same period cost $1.1 billion.

As the Advertiser editorial noted, we need arbitration for employees who cannot legally strike, such as paramedics and police officers, but not for those who can strike without threatening lives. We should limit the others' arbitration awards to a fixed share of state revenue increases so that resources can help with other state needs.

We urgently need such a reform. Unelected arbitrators should not be telling Hawai'i how to spend our tax money, taxes needed to help with state needs beyond government salaries.

Rep. Galen Fox, R-23rd (Waikiki, Ala Moana and Kaka'ako) served as minority leader this past legislative session. He wrote this commentary for The Advertiser.