Senate, House at odds on worker benefits
CTY - Governor Neil Abercrombie, left, and director of finance Kalbert Young speak during a news conference on Tuesday, December 4, 2012 at the State Capitol in downtown Honolulu. Following the formal close of last month's $866.9 million sale of State of Hawaii General Obligation Bonds, Governor Abercrombie, Kalbert Young, and regarding the state's financial foundation and vitality, particularly in the context of the so-called national "fiscal cliff." (Jamm Aquino/The Honolulu Star-Advertiser).
The House Labor Committee passed a bill Friday that strays from the Senate’s approach to managing state funds needed to cover employee and retiree benefits in the future.
The committee replaced the contents of a Senate bill with two House bills involving the unfunded liabilities.
The bill approved creates a task force to study the issue and an entity called a captive insurance company to manage the benefits.
The Senate voted earlier to establish a separate trust fund for employee benefits and give each government agency its own account.
Hawaii Finance Director Kalbert Young said after Friday’s hearing that he doesn’t see a captive insurance company, which helps organizations manage risk, as a real solution to the problem.
"I don’t think the state can escape funding its unfunded liabilities," Young said. "Although a captive insurance program may be a way to address future growth in the liability, we would have to still do some research on how to address current liabilities."
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He has previously testified to the House Finance Committee that he is not sure whether placing the management of state funds under a captive insurance company will save the state any money.
But Young also testified Friday that he’s not sure whether the Senate’s idea to establish a new trust fund is something the state can afford.
Young says he plans to talk to lawmakers about restoring some of the components of the Senate bill.
He says he is particularly intrigued by the Senate’s suggestion of a funding schedule to reduce the liability in six years, a provision the House removed.
Legislators in both chambers have said there is a critical need to resolve the multibillion-dollar cost of employee and retiree benefits and that they are working to find the best solution.
The House Committee on Finance will hear the proposal next.
The House last week passed a budget proposal dedicating at least $100 million a year to unfunded liabilities through the next two years.
But Gov. Neil Abercrombie has said the state would need to commit at least $500 million a year for 30 years.
