Proposed Hawaii public worker pay raises would cost more than $150 million

The public worker pay raises being advanced by House and Senate leaders would total more than $150 million in general funds, an expensive package that is raising questions among lawmakers who wonder how the state can possibly pay those raises and also cope with a $2.3 billion general treasury budget shortfall.

House Speaker Scott Saiki said the House and Senate have scheduled final floor votes on the public worker pay increases incorporated into Senate Bill 785 for Friday, and said Gov. David Ige’s administration should have enough money to pay the raises and still balance the budget with budget savings that lawmakers engineered in May.

State tax collections have plummeted as the pandemic shut down most of the Hawaii economy. To help offset the lost revenue lawmakers last month passed bills to defund vacant state government jobs, lapse unspent money back into the general treasury and substitute borrowed money for cash to pay for housing and other projects.

If the administration still comes up short, Saiki noted that lawmakers also authorized Ige to borrow up to $2.1 billion from the Municipal Liquidity Facility, a federal program established to make emergency loans to states and counties for up to three years to help cover their costs during the COVID-19 pandemic.

Senate President Ron Kouchi said that “the legislative action needs to be an up or down. The governor bargains, he sends the agreement over, and we need to take an action. It is a tough bill, and it is a tough time, and we’ll see what happens.”

House Minority Leader Gene Ward said his understanding was that all public worker raises would be delayed until after the pandemic has ended. Hundreds of thousands of private sector employees have lost their jobs or seen their hours cut during the COVID-19 crisis.

“This is an irresponsible thing to do on the part of the Democrats,” Ward said in a written statement. “I cannot in good conscience vote for a pay raise for anyone in the state of Hawaii while businesses are dying and people are out of work, hungry, and scared.”

Kelii Akina, president of the Grassroot Institute of Hawaii, said that “we respect the work of our public employees, especially first responders during the present crisis, but giving raises at this time could be unsustainable.”

“State and county budgets are facing severe shortfalls, the economy has crashed, tax revenues have dried up, the state is breaching its constitutional debt limit, and hundreds of thousands of Hawaii residents have lost their jobs,” Akina said in a written statement. “Under such conditions, it only makes sense that our lawmakers live within their means and reduce or hold the line on spending.”

Kouchi said he has also been receiving “more than a few” emails from people who think it is unfair for public workers to get raises when thousands of private sector workers have suddenly found themselves jobless.

The raises for this fiscal year and the year that begins July 1 would be paid to nearly 29,000 state, city and county workers who are members of the Hawaii Government Employees Association. Exempt employees who are not union members but are paid under the same compensation schedules would also get raises.

Those pay increases account for most of the cost of SB 785, but the bill also includes nearly $10.95 million to fund raises for members of the University of Hawaii Professional Assembly that were negotiated under a contract “reopener” this year.

Saiki and Kouchi noted that each of the other public unions including UHPA, Hawaii State Teachers Association and the United Public Workers are all scheduled to receive raises on July 1 because those raises were negotiated years ago, and money to pay them was appropriated and set aside last year before the pandemic.

Saiki said the HGEA raises were awarded through arbitration, and it’s unclear what would happen if the Legislature rejected them. The workers who would receive pay increases under SB 785 represent about half of the state and county workforce, which means half of Hawaii public workers will get raises, and the other half would not if the bill fails.

Ige in mid-April told public-worker union leaders that public employees including teachers would need to take furloughs that would amount to a 20% pay cut to help offset the budget shortfall. He later said there is “no immediate need” for furloughs or pay cuts, but some lawmakers wonder if the new raises might be followed by pay cuts or furloughs in the months ahead.

Kouchi, (D-Kauai-Niihau), said Democrats in the senate have asked for more information on the financial impact of the new raises and “what options are available.” When asked if the state will have to borrow money to pay for the raises, Kouchi replied that “we’ll see. At the time we take the vote, should it pass, then certainly that’s a fair question.”