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Friday, September 19, 2014         

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Concessions, not catastrophe


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State employees might believe, as they have for years, that no move to reduce labor costs -- let alone labor rights -- will be sought in Hawaii, at least in the near future. Their unions, though, would be wise to make significant concessions to prevent the kind of shameful attempts similar to those in Wisconsin to take organized labor rights away from state employees.

The Wisconsin square-off occurred after voters elected a Republican governor who campaigned to weaken collective bargaining by public employees, and the GOP won sizable majorities in that Legislature. Democratic Gov. Neil Abercrombie has been pro-labor for decades, as have the Democrats who overwhelmingly control Hawaii's Legislature. The state Constitution protects public employees' collective bargaining, but Wisconsin state employee unions lack constitutional protection.

Abercrombie wants to end Medicare Part B reimbursement to state retirees of deductions, typically around $150 a month, made by the Social Security system, to free up $40 million a year. Such a reimbursement is unheard of in the private sector, and state legislators should decisively end the reimbursement for new hires. The benefit is trickier to eliminate for current recipients, given a recent opinion from the Attorney General's Office that a forced elimination or reduction to existing recipients could be challenged in court. On balance, though, state pensioners should give up at least some of the overly generous reimbursement as the state struggles to control the budget or face drastic options again such as layoffs or furloughs.

The governor also wants structural changes in the state Employees' Retirement System, which has an unfunded liability of $7.1 billion. The Legislature is considering, as it should be, a restructuring that would adjust the retirement and benefits of future retirees. Twenty states changed pension systems last year and half of those increased employee contributions.

Most private employers in Hawaii and elsewhere have eliminated pension funds for employees and instead participate in 401(k)-type retirement savings plans. Several state governments, including Alaska, Colorado, Michigan and Ohio, have followed the trend. Utah has taken a hybrid approach, and come July 1, will start allowing state workers to choose either a traditional but scaled-back pension plan or a 401(k) plan.

Randy Perreira, executive director of the white-collar Hawaii Government Employees Association, says state budget cutbacks "should not be where it's just put onto the backs of the employees." That is another way of suggesting an increase in taxes, but such a tax hike would risk worsening Hawaii's sluggish economy.

Abercrombie promised in last year's campaign that he would not raise the general excise tax or pursue pay cuts or furlough days without pay to state employees in contract talks. However, he told the Star-Advertiser in October, "Of course, if economic conditions change, then every-thing must go back on the bargaining table."

His two-year budget draft released last week calls for $11.4 billion in spending for the current fiscal year and $100 million less in fiscal year 2013. Abercrombie said he wants to "make structural change" without "mimicking what's going on on the mainland right now with dramatic confrontations of one kind or another." Hawaii's public labor unions can do their part by agreeing to real concessions. Otherwise, the unthinkable, ugly groundswell that swept union-stronghold Madison, Wis., might well eventually land on Hawaii's shores.






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