Gov. David Ige on Monday vetoed a bill that would provide extra severance and retirement bonuses for workers affected by the privatization of Maui County hospitals. At the same time, he offered up an amended and less costly version of the measure for the Legislature’s consideration.
In a message to lawmakers, he said that Senate Bill 2077 jeopardizes the tax-exempt status of the Employees’ Retirement System plan because it allows affected employees to choose between a lump-sum cash payment that is taxable as wages and a special, employer-subsidized, early-retirement benefit. He said the ERS informed him of the risk Friday.
“I will neither approve this bill or let it become law when the offering of benefit choices included in the bill poses this threat,” he wrote.
Ige also expressed concerns about the “substantial” cost of the benefits to the state, which his administration pegs at more than $60 million.
The governor’s proposed measure would eliminate the choice of benefits and instead provide a negotiated separation benefit. It would appropriate $25 million in general funds to cover the costs of the benefits.
The bill vetoed by Ige would guarantee that 1,400 union workers at Maui Memorial Medical Center, Kula Hospital and Lanai Community Hospital would get special severance benefits — even if they continued working at the facilities under Kaiser Permanente, which is taking over the hospitals.
But Ige said he’s not sure that all the workers will be harmed by the transition to private ownership.
He noted that by mid-May, Kaiser had offered jobs to 1,538 state employees, regardless of whether they were part of a union or worked for the state for less than a year, and that more than 95 percent of workers had accepted the employment offers. Further, he said that he understood that Kaiser would pay most employees salaries or wages equal to what they are currently being paid by Hawaii Health Systems Corp.
“This suggests to me that a substantial number if not the majority of HHSC’s Maui region employees might not have to face the economic hardships to the degree that prompted the Legislature to consider and pass the current bill,” Ige wrote.
Members of the House and Senate now face a Tuesday deadline if they want to try to override Ige’s veto, which would require a two-thirds’ vote in each chamber. They could also put forward an amended bill for the governor’s consideration. But if it’s significantly different from what Ige is currently proposing, and the governor rejects it, the measure will be dead for the year.
Lawmakers have been told to be on standby at the state Capitol today in case leadership calls for an override vote or a floor amendment is proposed.
Rep. Sylvia Luke, the House Finance Committee chairwoman, said Monday evening that lawmakers are still considering their options. They could also let the governor’s veto stand.
“This is a very unusual situation where it is coming down to the wire in negotiations,” she said.
Luke said lawmakers were still trying to review the risk to the ERS plan’s tax-exempt status, an issue that they had just been informed of this week.
The vetoed bill had been strongly supported by the Hawaii Government Employees Association, which argued that the severance payments ensure that its members are treated fairly.
HGEA Executive Director Randy Perreira has argued that the state is breaching its bargaining unit contracts with the union as it works to privatize the Maui County hospitals.
If “we as consumers choose to opt out of a contract with a merchant or service provider, we can expect to incur fees and damages for not fulfilling our obligations,” he wrote in an opinion piece published by the Honolulu Star-Advertiser last week.
He said that what the union is seeking “is not exorbitant.”
Perreira also argues that while Kaiser has guaranteed the Maui hospital workers employment for six months, “it is uncertain what may happen to them after that period ends.”
HGEA spokeswoman Caroline Sluyter said Monday that Perreira had yet to see the governor’s compromise bill, so couldn’t comment.
