The Battle Over Public Employees

Larry Price
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Wednesday - June 17, 2009
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Earlier I wrote about public unions receiving the right to organize after President John F. Kennedy issued an Executive Order 10988, but unintentionally left out the important part, which came nearly 30 years later.

This event happened in 1990 and gave federal employees the right to organize, but they could not negotiate pay and benefits. Public employees in Hawaii received the right to organize and negotiate for pay and benefits in 1959, when Hawaii became a state and the Constitution of the State of Hawaii was signed into law.

Public unions have become very good at influencing the state Legislature to protect their numbers. The next six months in Hawaii are going to go down in history as the most significant in Hawaii’s labor history. There are a couple of things brewing behind the scenes.

First, the budget shortfall keeps getting bigger. The actual general fund collection through May was down 9.8 percent, not 9 percent. What does that mean to the taxpayer and more specifically, to the public employee?

If this amount holds firm through the end of the fiscal year (June 30, 2009), the state will end fiscal year 2009 down 9.8 percent instead of 9 percent as forecast on May 28. That means the state revenues are down an additional $38 million for fiscal year 2009 and an additional $72 million for fiscal biennium 2010-11, for a total of $135 million less than the Council of Revenues forecast on May 28! To say the numbers are not firm is a gross understatement. Each .2 percent equals $9 million. So, if this year ends down 10 percent (1 percent more than earlier projections), it would mean down $45 million for fiscal year ‘09, and $90 million for 2010-11, for a total of $135 million less for the upcoming biennium than earlier projected. When the Council on Revenue releases its September projections, state workers could be quite anxious.

There is more intrigue going on at the Square Building on South Beretania Street, where legislative leaders are planning their next move in the public employee drama. It has to do with the governor’s power to mandate furloughs. The unions are being coached by the legislative leadership to take the governor’s furlough plans to the labor board and then to the courts. The backup plan calls for the Legislature to revive several bills that could be amended to impact the governor’s authority to mandate furloughs.

There are some questions being raised about what a furlough is and how it affects the public employees’pay and benefits. Basically, the way the law is now written, a furlough does not create a break in service, it does not affect their right to health insurance, and furlough days do count when figuring pensions since they are based on wages paid.

What’s going to happen? The Democratic leadership, union leaders and possibly the mayors may try to delay a “last best” offer until the Legislature can come back in special session and possibly raise taxes. They would certainly try to amend statutes that give the governor the right to lay off employees for lack of funds. The timing of the special session would be best sometime in September after the Council on Revenues latest forecast is announced.

All this may sounds like a bunch of petty politics. Rest assured, it is not. The factions in the furlough argument are adamant in not giving up, simply because a 14 percent pay cut is a lot of money for most public employees. You can’t blame union leaders for trying to protect their constituents, either.

And while that is true, the governor has the power to restrict their budgets by a dollar amount equal to three furlough days a month. She’ll end up with the savings the state needs one way or another.

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