HGEA agrees to pay cut

Gov. Neil Abercrombie and the Hawaii Government Employees Association, the state’s largest public-sector labor union, announced a tentative two-year contract agreement yesterday that includes a 5 percent pay cut for public workers.

The potential deal, which has to be ratified by the union’s more than 28,000 state and county workers, also involves an even split between the state and the counties and public workers on health care premium costs.

Public workers would also get an additional six hours of paid time off each month, according to sources.

The tentative agreement involves a smaller salary reduction than the existing contract for the HGEA’s workers, which includes two furlough days a month, the equivalent of about an 8 percent to 10 percent pay cut.

Full details of the agreement were not available last night. But the Abercrombie administration said the potential deal does not include furloughs or layoffs.

The administration said the agreement, which would run from this July through June 2013, would save the state about $65 million in fiscal year 2012 and about $59 million in fiscal year 2013.

“Since the beginning of our administration, we have talked about shared sacrifice as the pathway to changing Hawaii,” Abercrombie said in a statement. “Today, the Hawaii Government Employees Association stepped forward to do their part by making a sacrifice to help all people of Hawaii. In these worst of fiscal times, a new era of teamwork and hope has begun.”

The HGEA, which has seven mostly white-collar units across state and county government, declined to comment publicly on the details. “There is a tentative agreement on the parameters of the contract, but details are still being finalized with the employers,” Jodi Endo Chai, an HGEA spokeswoman, said in a statement.

Honolulu Mayor Peter Carlisle said he spoke by telephone with Abercrombie yesterday morning and was told about the 5 percent pay cut and the split in health care premium costs. He said he was also told about the additional paid time off for public workers, which he does not agree with, but noted that the provision about time off was not included in the governor’s announcement.

“I need to find out in writing the truth and the whole truth about the provisions of the tentative agreement,” Carlisle said in a statement. “Once we have received all of the provisions in writing, we will need to determine the financial impact on the city.”

Abercrombie has said he was looking for 5 percent labor savings in contract talks with public-sector unions, or about $88 million a year. If HGEA workers ratify the tentative contract, it would put the state on track to reach that goal.

The Hawaii State Teachers Association and the United Public Workers are also in contract talks with the Abercrombie administration.

The potential deal with the HGEA gives state lawmakers some idea of how much to expect from labor savings as they complete their drafts of the budget.

The House budget draft does not include any labor savings, while the Senate draft that moved out of the Senate Ways and Means Committee on Tuesday presumes that the equivalent of two furlough days a month for state workers would continue.

The Senate draft also recommends the even split with public workers on health care premium costs. Abercrombie, in what the administration described as an act of good faith, had agreed in December that the state would pick up 60 percent of health care premium costs for the last quarter of the fiscal year that ends in June.

“Obviously, we had built into our financial plan certain labor savings. If the contracts that the governor negotiates do not generate the labor savings, then we’ll look at other options,” said state Sen. David Ige (D, Aiea-Pearl City), chairman of the Senate Ways and Means Committee. “It probably means bigger cuts to state government, but we’ll take it from there.”

The Senate is also considering several revenue-generating options — including a potential increase in the general excise tax and the temporary suspension of tax exemptions on certain business activities — to close a projected $1.3 billion deficit over two years.

House Republicans, like the Senate, had called for keeping two furlough days a month for state workers to control labor costs.

Jonah Ka‘auwai, chairman of the state GOP, said the HGEA was “just rolling over for Gov. Abercrombie with seemingly little regard for the rank and file” after fighting former Gov. Linda Lingle, a Republican, for months before agreeing to the existing contract.

“Two short years ago, (HGEA Executive Director) Randy Perreira and other union bosses rejected salary reductions offered by the previous administration and opted for furloughs,” Ka‘auwai said in a statement. “It is amazing the difference political party makes when it comes to union negotiations.”