The City and County of Honolulu might tap roughly $5 million in federal COVID-19 money to help pay the estimated tens of millions of dollars in hazard pay to city workers employed during the pandemic.

The Council’s Budget Committee on Tuesday recommended adoption of Resolution 235, which seeks to put reprogrammed American Rescue Plan Act of 2021, State and Local Fiscal Recovery funds toward the city’s other post-employment benefit, or OPEB, activity.

The city-initiated resolution urges the Council to reprogram approximately $5 million for “revenue replacement” and “to further advance payments to the city’s OPEB activity,” according to a Sept. 17 city memorandum.

According to the U.S. Treasury Department, ARPA funds must be obligated for new, eligible uses by Dec. 31.

Jurisdictions have until Dec. 31, 2026, to fully expend those funds — money meant for costs incurred after March 3, 2021.

“As the Dec. 31, 2024 deadline to encumber SLFRF monies approaches, the departments are finalizing their obligations on various pre-approved projects, and have or are actively preparing to return any unobligated funds,” city Managing Director Mike Formby wrote in the memo. “The city currently anticipates approximately $5,000,000 in unobligated funds from the various pre-approved projects.”

Introduced by City Council Chair Tommy Waters, Resolution 235 says that “to date, $115 million in ARPA funds have been reprogrammed for this purpose and there are currently no additional sources of funding available.”

The resolution comes after the Council and city officials have for months pledged to repay eligible, unionized city workers employed during the pandemic “temporary hazard pay” in order to avoid legal entanglements.

Hawaii’s government worker unions, including the Hawaii Government Employees Association, United Public Workers and the State of Hawaii Organization of Police Officers, pressured the state and its four major counties to pay back their respective memberships for pandemic-era work.

At the meeting, Formby told the Council that “if your desire is to give us more capacity for hazard pay based on this prepayment of $5 million to OPEB, we would need an appropriation for you in the next fiscal year budget for hazard pay.”

“So this reprogramming to OPEB does not give us the ability to increase the amount that we can negotiate and settle for hazard pay in this fiscal year; it would be next fiscal year,” he said.

Radiant Cordero, chair of the Budget Committee, asked whether the city administration will propose “a particular amount for hazard pay in the next budget,” which begins July 1.

“I’m sure we will, but we don’t know what that amount will be right now because I don’t know what the deficit is on this fiscal year payments,” Formby replied. “We’re in the process right now of determining the payouts on the UPW arbitration.”

Earlier this year UPW Local 646 — among other city unions — worked to gain COVID-19-related hazard pay from the city for its membership via arbitration.

On July 30 arbitrator and former Hawaii Supreme Court Justice Simeon R. Acoba Jr. issued a decision on UPW’s hazard pay grievance against the city.

According to UPW documents filed Aug. 17 with the 1st Circuit Court, the award is for a hazard pay differential of 15% for the period March 5, 2020, to March 5, 2022.

“Individual employee payments shall be adjusted for changes in working conditions and employee duties during the (grievance period),” the filings state. “The UPW and the city shall act in cooperation and consultation with each other in administering the individual employee payments.”

Originally, UPW sought a 25% pay differential based on individual workers’ minimum pay grades, according to UPW spokesperson Maleko McDonnell.

According to Formby, the city is “working with UPW” on this two-year hazard pay period.

He estimated hazard pay amounts of about $28 million to $30 million.

“If we include the Board of Water Supply, I think it goes up to about $32 million,” Formby added. “And so once we make those payouts, then we know what’s left out of the $115 million, and then we’re negotiating with SHOPO and HGEA.”

He said, “As we go along through this entire fiscal year, we’ll know what that remaining balance is, if anything.”

“And if there’s nothing left, then the appropriation would be next year’s appropriation to settle any amounts,” he said. “And what makes it a little uncertain at this point is that what we’re proposing to SHOPO and HGEA is that payments not be 100% cash.”

“So what we’re negotiating is that a portion, perhaps 80% of their hazard pay, (will) be by cash and 20% be by comp time,” Formby said.

He said compensatory time off — which typically offers employees paid time off in exchange for working extra hours — “goes on their account, and they can take that over their life in the city.”

“And so it’s like an annuity for them over time,” he said. “But for us it distributes that cash obligation over time versus having to make that payment next year, because we don’t want to go into next year’s budget with a $40 (million) or $50 million deficit.”

Hazard pay negotiations regarding UPW “will probably be concluded within the next month and a half to two months,” he said.

“And we’ll be focusing on SHOPO and HGEA,” he added.

Later, Council member Calvin Say asked, “At what point in time will you consider having a deadline as far as settlement of the hazardous pay, in anticipation for the Council if it develops into next year’s budget?”

Formby replied that the city will know by early March — around the time the administration submits next year’s city budget for the Council — “what money is not available this fiscal year.”

“So that’s our deadline, because we need to know that by the time we submit our budget to Council,” he said. “So I think for SHOPO, HGEA and UPW, that will be very clear.”

He added, “Groups that are out there that the Council has previously expressed a desire to look at hazard pay for that are not included” were firefighters, bus drivers and handi-van drivers.

“And those are the categories that will probably go into next fiscal year, and we’ll be able to figure that out at some point,” he said. “But I think the $115 million that’s currently programmed for hazard pay, we’ll know by early March — March 2.”

Settlements could also be reached soon as well.

“We’re looking at a negotiated settlement with SHOPO, and the same is true of HGEA,” Formby said. “HGEA has not filed arbitration against the city yet, and we’re negotiating with HGEA, and the goal is to come to an agreement so we can have those funds allocated by March of 2025 as well.”

The full Council is expected to review Resolution 235 for possible approval at its next meeting in October.