Hawaii lawmakers approve public worker raises worth more than $150M

The state House and Senate on Friday approved public worker raises worth more than $150 million for tens of thousands of public employees even as hundreds of thousands of private sectors workers have lost their jobs, but lawmakers noted that public employees may still face furloughs or layoffs in the months ahead.

Members of the Hawaii Government Employees Association will receive the bulk of the raises, and lawmakers pointed out those are the same workers who have been supporting the state and county responses to the coronavirus pandemic by handling tasks such as distributing food aid and unemployment payments, and doing contact tracing to search out people who may be infected with COVID-19.

The state is facing a $2.3 billion budget shortfall for this year and the new fiscal year that begins July 1, but House Finance Committee Chairwoman Sylvia Luke told her colleagues that Gov. David Ige has developed a financial plan that assumed lawmakers would approve the raises.

However, the final details of Ige’s financial plan have not been made public, and it is unclear if furloughs or layoffs might be part of the plan.

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 backtracked on that, saying there is “no immediate need” for furloughs or pay cuts.

If the administration does come up short, House Speaker Scott Saiki has noted 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.

The vote in the Senate on the raises was 21 senators in favor of the raises, and only Sens. Jarrett Keohokalole (D-Kailua-Kaneohe), Gil Riviere (D-Heeia-Laie-Waialua), and Laura Thielen (Hawaii Kai-Waimanalo-Kailua) opposing the measure.

In the House, the vote was 46-4. The only votes against the measure came from Republicans, including Reps. Bob McDermott (R, Ewa Beach-Iroquois Point), Val Okimoto (R, Mililani-Mililani Mauka-Waipio Acres), Cynthia Thielen (R, Kailua-Kaneohe) and Gene Ward (R, Kalama Valley-Queen’s Gate-Hawaii Kai).

Rep. Rida Cabanilla Arakawa (D, Ewa Villages-Ocean Pointe-Ewa Beach) was absent for the vote.

McDermott said that six months ago lawmakers would not have hesitated to approve the raises, but today “our future is uncertain. It’s quite surreal, in fact. We don’t even know what’s going to happen next week, let alone next month.” The future of the state depends in large part on the future of a visitor industry that has been stricken by the pandemic, he said.

“The question is, how can we in good faith commit to spending $150 million when we’re facing a potential deficit of $2.3 billion. A prudent policy would be to defer these until a date later. I just can’t in good faith vote for a raise when we have people out of work,” he said, noting thousands have been lining up at food distribution sites.

“I understand the technicalities of how we arrived here, but the optics to the man on the street — it looks terrible. It just looks terrible,” McDermott said.

Senate Judiciary Committee Karl Rhoads (D-Downtown-Nuuanu-Liliha), who supported the raises, said many government workers have been without a contract for a year now, and during that time have actually lost ground because of inflation. The bill helps HGEA members to catch up to other public workers who received raises last year, and will get new raises on July 1.

But the bill does nothing to shield public workers from the layoffs or furloughs that may be on the horizon, said Rhoads.

“Baring a vaccine or significantly more help from the federal government, the chances of significant cuts in the one year to 18-month range is very, very high,” Rhoads said. “By then we will have burned through our rainy day funds, which we have so painstakingly stockpiled since the last recession, used up the CARES Act money, and tapped every available special fund for general fund use.”

“If we get to that point, we will have no choice but to cut, and government workers will take the brunt of that economic pain,” he said.

Saiki and Senate President Ron Kouchi have pointed out that each of the other public unions including the University of Hawaii Professional Assembly, 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.

The workers who would receive new pay increases under SB 785 — the bill that was approved today — represent about half of the state and county workforce. If the bill failed, that would mean half of Hawaii public workers will get raises because they were budgeted last year, and the other half would not, Saiki said.

Some of the new HGEA raises were awarded through binding arbitration, and it’s also unclear what would happen if the Legislature rejected them, Saiki has said.

House Labor Committee Chairman Aaron Johanson said in the past the Legislature has always funded the public worker raises that are negotiated by the governor “as a procedural matter.”

It would set “a dangerous precedent” if lawmakers refused to pass the bill this time, because it would effectively insert the Legislature into the negotiating process. That would effectively set the precedent of using the Legislature as “a second front in collective bargaining when either party doesn’t like the outcome of settled negotiations,” said Johanson, (D, Fort Shafter-Moanalua Gardens-Aliamanu).

“It is best to left to the governor and the unions to hammer out the contracts and to abide by them,” he said. He also observed that the raises will be paid to nurses, educators, social workers and other who have kept the state running during the pandemic.

“These essential workers and the many more that I haven’t mentioned ensure that the critical services that all of Hawaii’s people rely on are provided when times are good, but more importantly when times are bad,” Johanson told his House colleagues. “They are the essential workers who have risked their lives and their families’ lives going to work each and every day during the shutdown.”

The new raises will be paid to nearly 29,000 state, city and county workers who are members of the HGEA. 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.

The Ige administration has repeatedly refused to disclose the percentage of pay increases awarded to the members of each bargaining unit until the raises are funded through appropriations by the state Legislature and the City or County Councils of each island.

However, sources say the raises for HGEA members approved today are generally in line with the 2%- to 2.5%-per-year increases that were awarded to other public-sector unions in recent years.

The House and Senate also gave final approval today to Senate Bill 126, which earmarks nearly $100 million in federal CARES Act funding to provide rent subsidies or assistance for homeowners. The money is intended to help up to 37,000 households that may be at risk of eviction or foreclosure because they lost jobs or income during the pandemic, Luke said.

The program will pay up to 50% of the rent or $500 per month — whichever is less — with a cap of $2,500 per household.

Of the $100 million, $85 million would be distributed as actual housing assistance, including $54 million for families in Honolulu. The bill earmarks another $15 million for the Housing Finance and Development Corporation to cover the cost of administering the program through an unidentified non-profit entity.

A separate appropriation in the bill provides for another $15 million in CARES Act funds to fund grants to support child care facilities that have been struggling to continue operations in the pandemic.

Another $230 million was included in the bill to fund a new $100-per-week state unemployment benefit for eligible Hawaii residents through the end of the year; and nearly $40 million for Gov. David Ige to use as a “discretionary fund.”

The bill earmarks another $100 million in state or federal funding for personal protective equipment such as masks and gloves for hospitals, childcare facilities, elderly care facilities, businesses, non-profits, and schools; and $90 million for “airport screening and health assurance security initiatives.”

SB 126 also allocates $36 million in state or federal funding for retraining and workforce development programs, and another $15 million that will be distributed as “innovation grants” to support emerging industries to create a supply chain for cleaning supplies and personal protective equipment.

The bill also includes $5 million to support food distribution programs; $3 million to support the commercial fishing industry; and $2 million to finance a “public-private partnership to provide support to public high school seniors who were adversely affected by school closures in their final semester of school.”