Analysis

By Kathryn Bender, Star-Bulletin
State Sen. Randy Iwase drops his pens on the floor
for entertainment as he listens to others give speeches
during his last day in the Senate.

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House packages
unions’ raises with
a pay freeze

The action was overshadowed by
the Senate's blunt rejection of
Attorney General Bronster

By Mike Yuen
Star-Bulletin

Even before this year's legislative session ended last night, it was already rubbed into the public's consciousness by what the Senate did: reject the renomination of Attorney General Margery Bronster.

But lost in the controversy still swirling over the Senate is what the House has done. With no fanfare, it persuaded the Senate to agree on legislation that freezes all public workers' salaries for the next two fiscal years, beginning July 1.

The House did it by packaging the pay freeze in a bill that funds retroactive pay raises for unionized government workers.

The pay freeze could portend the start of a significant shift in state government. It could even be as important as the tax-relief measures for business that legislators passed yesterday -- perhaps even more so.

By agreeing on the pay freeze, the Democratic lawmakers who dominate the Legislature, many of whom depend on the unions for manpower and money during political campaigns, have demonstrated a willingness to put themselves on a path that likely will have them at odds with the public workers unions.

Cost containment the 'key'

The unions representing public schoolteachers and University of Hawaii professors have already criticized the pay freeze, which is achieved by prohibiting the unions from negotiating for raises.

"Government cost containment is going to be key in this state," said House Majority Leader Ed Case (D, Manoa). "The pay freeze is part of that. At some point you've got to say, 'State and county personnel costs -- salaries and benefits, not just of active employees but also retirees -- are really eating us up.'

"That is going to be our biggest challenge going down into the future -- and one we haven't really faced yet."

House Finance Chairman Dwight Takamine (D, Hilo) said: "From the very start, we have said we have to live within our means -- just like any family struggling in Hawaii. And the Legislature has to lead by example. So when it comes to budgetary concerns, there has to be a concern about the cost of government."

House Speaker Calvin Say (D, Palolo), who orchestrated the salary freeze, originally recommended four years.

"I'm just trying to listen to what the public is saying -- control government spending," Say said.

Health benefits cap is goal

Salaries, health and retirement benefits, and workers' compensation account for about 55 percent of the approximately $3.1 billion annual operating budget of the cash-strapped state general fund, according to Budget Department figures.

And as Hawaii's population gets older, the number of retired government workers getting benefits grows.

For example, in 1995 there were 58,498 "active" enrollees in the retirement fund for state and county workers, plus 24,517 who were retirees. In 2001, there will be an estimated 27,700 retirees and 58,000 active enrollees in the fund.

"The House wants to cap benefits from the health fund," Case said. "We have one of the most generous in the nation. That will have to change. We all have to find a way to change it. If you extrapolate it out into the future, it's really scary.

"So the House has said, 'Hey, we got to get a handle on this.' If we're not going to change the statutory benefits themselves, at least we're going to have to cap the amount contributed by the state government after the next fiscal biennium."

Fewer workers, better pay?

Another option is hiring new employees at a lower pay and benefit scale.

The state may want to do what the federal government is doing in downsizing, Case said. That's to reach a point where there are fewer workers, but have them better paid and "working under a system that is more flexible."

Also, civil service and collective bargaining will need to be reformed, Case said.

The reaction from the Senate, which has generally been very sympathetic to labor, will be crucial. But the Senate may not have much room to disagree with the House.

Both chambers this session eschewed broad-based revenue generators, such as tax increases and gambling. Plus, they agreed last year to Gov. Ben Cayetano's four-year plan, which began this year, of $750 million in personal income tax reductions. This year they agreed to reduce the "pyramiding," or repeated imposition, of the 4.0 percent general excise tax on services to 0.5 percent. When fully implemented in seven years, it will mean a revenue loss of $150 million annually.

"This commits government to a path of cost reduction," Case said. "We're not going to be able to avoid that."

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Winners and Losers

Who came out on top this legislative
session? Who didn't? Here's the assessment
by the Star-Bulletin's Capitol Bureau:

The Winners ...

House of Representatives

The Senate's decision to sever the heads of Attorney General Margery Bronster and Budget Director Earl Anzai revealed the Balkanized chamber apparently was more concerned with power plays and sending harsh messages to Gov. Ben Cayetano than it was in confronting the important issues facing the state. In contrast, the House, under new Speaker Calvin Say, was issue-oriented -- particularly in trying to revive the economy -- and not into playing politics.

Public workers unions

They got their retroactive pay raises and were generally successful in maintaining the status quo. When they talked the Senate listened. The public workers unions, however, did suffer what was for them a serious -- and rare -- setback. The House managed to convince the Senate to agree to a two-year pay freeze for government workers beginning July 1.

Margery Bronster

Yes, when the Legislature adjourned, she was officially no longer the state's chief law enforcement officer. But when the Senate refused to confirm her to a second term, the Senate transformed her into the isles' Joan of Arc for taking on the powerful Bishop Estate.

Sen. Colleen Hanabusa

The Waianae Democrat was undoubtedly the Legislature's outstanding freshman -- intelligent, articulate, well prepared, respected, even feared. Seen as a leader. The jury is still out on how her upward trajectory will be affected by her "no" vote on Bronster's reconfirmation.

House Judiciary Chairman Paul Oshiro

The Ewa Beach Democrat was seen as fair and respected by his Senate counterparts -- quite a contrast from former Chairman Terrance Tom, who lost his Senate bid last year. But House Majority Leader Ed Case (D, Manoa) needs to give Oshiro lessons on how to candidly answer reporters' questions.

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... and the losers

Senate

See House, under Winners.

Gov. Ben Cayetano

He may have narrowly won re-election, but he has more losses than wins in the Legislature, which is controlled by his fellow Democrats. There is much antipathy toward him in the Senate.

Sen. Marshall Ige

The Kaneohe Democrat does not see a conflict of interest in his voting against the reconfirmation of Bronster, whose Bishop Estate probe has implicated him. Estate officials are alleged to have directed some of its nonbid contractors to secretly pay off $18,300 of Ige's campaign debt.

Senate Judiciary Co-Chairmen Avery Chumbley (D, Kihei) and Matt Matsunaga (D, Palolo)

Although they head one of the smoothest-running panels in the Legislature, they could lose their chairmanships in a Senate reorganization. Senate President Norman Mizuguchi didn't back their recommendation that Bronster get a second four-year term, nor did 13 other of their colleagues.

The public

The economy is still in the doldrums. Businesses are struggling. Actions by lawmakers lead to cynicism. Need we say more?

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Legislative Scorecard

Experts in various
areas assess the
Legislature's performance:

The Rev. Frank Chong

Social services advocate and executive director of the Waikiki Health Center

Grade he gives the Legislature: D
Quote: "Demeaning, divisive, disrespectful.

"If it were a 'do-nothing session' that would be bad enough. But they were derelict in their duty to promote and secure economic and social justice. 'Disappointing' and 'disastrous' are inadequate to describe the missed opportunities to provide defining leadership for the next millennium.

"A hundred years from now, no one will remember them except to equate their accomplishments to that of a group of individuals who a hundred years ago plundered a culture and stole the birthright of a sovereign people."

Jeffrey Mikulina

Director, Sierra Club, Hawaii Chapter

Grade: C+
Quote: "Lawmakers neglected to fix last year's automatic permit approval act and failed to pass legislation that would use tourist dollars to help preserve the environment. As with many issues, our leaders once again found themselves stuck in a traffic jam, with everyone honking their horns but heading in no clear direction.

"Fortunately, the more egregious bills that would have decreased public participation and weakened our land use laws were defeated, but legislators failed to engage any environmental issues deeply -- issues that affect the health of both the economy and Hawaii's residents.

"This only demonstrates that many lawmakers continue to mistakenly perceive a vote for the environment as a vote against the economy."

Mililani Trask

Trustee, Office of Hawaiian Affairs

Grade: D
Quote: "I'm really upset about what's happened this session. Not only did we not address the critical issues for the state -- the economic crisis, shoring up public services -- but we also didn't deal with the critical needs for education and the State Hospital. In all those areas, virtually nothing was done.

"There was running around in these last few days for tax relief, but it was geared more for big business than for small business. What's happened these last few days was pandemonium. The Senate was shut down by the Bronster issue, which was heavily influenced by Bishop Estate.

"We're going to see bills dying now -- not because they were supposed to be killed, but because they didn't have time to grasp the documents. The whole system just broke down. So we're going to see badly needed legislation that both the House and Senate wanted die because everyone was scrambling in these last few days. It was really just a mess.

"We're a state in a fiscal crisis because of political infighting. We're in a situation with no fiscal director in the state. For a state in financial crisis, one thing you don't do is kick out the fiscal director and attorney general without a plan to fill the vacancies. And now we have the leadership of the Senate in question."

Peter Carlisle

City prosecutor

Grade: D or D-
Quote: "In terms of overall grade I would give an 'F' to any entity that would not confirm Margery Bronster (to a second term as attorney general) but would have Cliff Uwaine (who was convicted of voter fraud in 1986) come out of committee. Speaking in terms of law enforcement, we didn't ask for much, and got a lot less. Instead of a whole loaf, we got about a quarter, and it was all reactive, not proactive. So they put out small fires rather than big fires."

Lowell Kalapa

President, Tax Foundation of Hawaii

Grade: Not given. ("I do not believe it responsible to assign a single grade to the accomplishments of the Legislature.")
Quote: "While the Legislature is to be congratulated for adopting the pyramiding bill and the exemption of exported services from the general excise tax, note that the tax relief from pyramiding of the general excise tax will take seven years before the relief is fully realized. This is because both the administration and the Legislature failed to address the need to right-size government to a level that taxpayers and this economy can afford.

"Public officials have this real problem with tightening the government's belt. As a result, the economy and the taxpayer will continue to suffer under this heavy burden of taxes and regulations."<

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Compiled by Terrence Lee, Star-Bulletin

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