Privatization accord
is in the worksHouse and Senate conferees agree
on a measure, but counties question
whether it will save money By Craig Gima
Star-BulletinA House-Senate conference committee has agreed on a bill that will allow privatization of government services, but county attorneys have questions about how much savings taxpayers will see.
The attorneys say the bill will protect short-term contracts to allow companies and nonprofit groups to provide janitorial, tree-triming and other services. But it may discourage longer-term contracts for services like curb-side recycling and landfills.
"Its going to hinder the county's ability to go look at long-term contracts, long-term ways to save money, long-term ways to do a better job with the same taxpayer's money," said Kauai Deputy County Attorney Jonathan Chun.
"It has given us a little bit of something, but it hasn't given us privatization now," said Maui Corporation Counsel J.P. Schmidt. "We needed the ability now to enter into some of these contracts to save money, to provide services to the people."
County attorneys say the bill could discourage bidders on large privatization contracts because in three years, all new contracts would have to be reviewed and could be canceled by a yet to be set up privatization process.
The bill would establish committees to come up with "performance-based" budgeting and "managed competition" processes that will enable governments to compare the cost of providing a service with its own workers or through private contracts.
The measure does protect existing contracts from the "managed competition" review, but new contracts signed during the three years when the privatization process is being developed will be subject to review.
The compromise bill also exempts new privatization contracts from collective bargaining and civil service laws, a key sticking point in the negotiations.
Big Island Mayor Stephen Yamashiro said the exemption is important if privatization is to happen.
"It (the bill) covers 90 percent of privatization problems by addressing short term projects," said Yamashiro. But he also expressed concern about long-term contracts.
Government labor unions argued that all contracts should be reviewed by the process so that taxpayers would know if they are really saving money.
But county attorneys said large contracts for landfills and other services need longer periods of time so contractors can cover costs.
"What's going to happen is the contract, when he puts out to bid, he's going to look to see 'Am I willing to put my capital out there, knowing that my contract might be canceled in the year 2001?'" Chun said.
"I think in the end the review process will better assure that the efficiency and the cost-effectiveness of the contract are in the best interest of the public," said Senate Human Resources Co-Chairwoman Suzanne Chun Oakland.
She said new contracts can include provisions to protect businesses if their contracts are canceled through the managed competition process.
Hawaii Government Employees Association Executive Director Russell Okata said he had a mixed reaction to the bill.
"We're hopeful that we can demonstrate that when public employees do the work they can do it more effectively and also with an eye to the cost of these services," he said.
Okata said the measure makes things fair for employees.
"Not only did the Legislature have to consider positions of employers, which are the state and counties, but also to fairly treat the workers that we represent who are affected by any decision to privatize," he said.
The bill protects workers from losing their jobs to privatization until the managed competition process goes into effect.
Deputy Attorney General Charleen Aina said that provision may prevent the state from privatizing additional services because it could eliminate any cost savings.
The bill also gives new contracts some protection from court challenges, but allows lawsuits already filed to continue and unions could continue to challenge existing contracts until the governor signs the bill.
Honolulu Deputy Corporation Counsel Chris Parsons said that could give unions a "window of opportunity" to continue to challenge contracts.
Okata said his union has no plans to challenge additional contracts. United Public Workers State Director Gary Rodrigues could not be reached for comment.
House Labor Chairman Nobu Yonamine said the bill is better than no bill.
The agreement was worked out through phone calls and closed-door meetings through the weekend after the four county mayors marched on the state Capitol last week urging lawmakers to pass a privatization bill.
State tax revenue rose
By Mike Yuen
19.8% over last April
Star-BulletinSparked by a surge in individual income tax collections, revenues from all tax sources rose 19.8 percent, or $42.4 million, last month when compared with April of last year, state Tax Director Ray Kamikawa says.
That brings cumulative tax collections for the first 10 months of the current fiscal year to 2.3 percent, or $53 million, more than the first 10 months of the previous fiscal year.
The state Council on Revenues most recent forecast had pegged revenue growth at 1.2 percent for the current fiscal year, which ends June 30.
Kamikawa said: "This April, taxpayers with balances due paid $14.3 million more with their returns while those with refunds received $16 million less in refunds as compared to last April.
This combination of higher balances due and smaller refunds was largely a result of the reduction from 10 percent to 8 percent of the maximum withholding rate on wages.
Taxpayers also increased the amount of their first quarter estimated tax payment, resulting in April's $6.7 million jump in declarations of estimated taxes."
But general excise and use taxes, the state's largest revenue source, dropped $5.1 million, Kamikawa added.
"With this decline, cumulative general fund deposits from this source for the first 10 months of fiscal 1997-98 fell $19.4 million, or 1.6 percent, behind last year's pace, he said.
Hotel room tax collections fell 10.1 percent in April, Kamikawa added.
The cumulative tax revenue collections for the first 10 months of this fiscal year total nearly $2.4 billion. Last month, the total was $256.3 million.
Bill addresses Mitchell
By Craig Gima
rule in workers comp
Star-BulletinNonunion employers would not have to pay workers compensation stress claims resulting from suspensions, firings or other good faith disciplinary actions under a bill passed by a House-Senate conference committee last night.
But the bill is only a slight improvement for the state and other employers with unionized workers, said James Takushi, director of the state Department of Human Resource Development.
"I don't think it's going to help us that much," he said.
Takushi said he is disappointed the bill would still allow cases for other personnel actions such as layoffs or transfers.
It also sets up a higher burden of proof for union employers because it requires the standard be set by union or other employment contracts. In most contracts, the standard is "just cause" which is more difficult to prove than "good faith".
Senate Human Resources Committee Co-Chairman Brian Kanno said the bill will disallow workers compensation cases brought because of a state Supreme Court decision in the Mitchell case.
In the Mitchell decision, the court ruled that a teacher on the Big Island could collect workers compensation after she suffered stress because of pending disciplinary action.
Takushi has said the state has 25 to 30 stress claims related to the Mitchell decision. Those cases could be affected by the workers compensation stress bill that passed out of committee last night.
Kanno (D, Makakilo) said the compromise bill means the standard for workers compensation and grievance cases will be consistent.
He does not expect workers compensation claims will become an issue in contract negotiations.
House Labor Chairman Nobu Yonamine (D, Pearl City) said the bill is not perfect but does give most employers some protection even if it only covers disciplinary action.
"This may be a gap in the law," he said. "Promotions, layoffs could result in a claim for stress."
Yonamine said the issue of disallowing stress claims from other personnel actions will be back before the Legislature again next year. "We got a bill and we can improve on it as we go along," he said.
Kanno said the Mitchell decision only addressed disciplinary actions and he is concerned legitimate stress claims could be disallowed by including the other personnel actions language in the bill.
Passed legislation
A bill to provide emergency care for health plan members without the plan's preauthorization.
