State lawmakers on Wednesday overrode Gov. David Ige’s veto of a bill providing severance packages and retirement benefits to Maui County hospital workers who will lose their state jobs as three hospitals are transferred to Kaiser Permanente.
However, lawmakers provided no funding for the benefits package, making it unclear whether Ige can or will implement the measures outlined in Senate Bill 2077.
Despite the lack of funding for the severance and retirement bonus program, House Speaker Joseph Souki said Ige is required to implement the bill “as much as he can.”
“It’s all in his hands now,” Souki said. “We passed the bill. … It becomes a law without his signature, and so it’s all up to him.”
When asked whether the hospital workers can now claim their severance payments or retirement bonuses, Souki replied, “There’s no money yet.”
Souki said it will be “rather difficult” to implement the bill without funding, but lawmakers said Ige’s options could include transferring money from other operations to fund the new hospital worker benefits, or asking lawmakers next year for an emergency appropriation to fund the effort next year.
Lawmakers last year authorized privatization of Maui Memorial Medical Center, Kula Hospital &Clinic and Lanai Community Hospital, and the state reached an agreement in January to have Kaiser Permanente operate all three.
The Maui effort would be the largest privatization of public facilities in state history, and Ige has predicted it will save the state $260 million in hospital subsidies over the next decade.
Other state-run hospitals are considering privatization, and the public worker unions that represent about 1,400 employees at the Maui hospitals fought the hospital privatization effort. Many or most of the hospital staffers are expected to continue working at the hospitals for Kaiser, but they will no longer be state workers.
Senate Bill 2077 was approved by lawmakers at the request of the Hawaii Government Employees Association this year to help those unionized workers by allowing them to choose either a severance payment or a retirement bonus.
Ige vetoed the bill earlier this month, saying it was too expensive and could jeopardize the tax-exempt status of the Employees’ Retirement System. Ige estimated the measure could cost the state more than $60 million.
Ige said Wednesday that he still has many concerns about the bill. He said his administration will confer with the attorney general to assess the impact of the veto override and continue to work on a smooth transition for the hospitals’ privatization.
The United Public Workers union, meanwhile, is challenging the privatization of the hospitals in court. The UPW filed a lawsuit alleging the privatization effort violates its state contracts that extend until June 30, 2017.
The 9th U.S. Circuit Court of Appeals in May issued an injunction in the UPW lawsuit that temporarily halted the privatization effort. Kaiser was scheduled to take control of the hospitals on July 1 but has been unable to do so because of the injunction.
The governor said Wednesday they are close to settling the case.
Lawmakers delayed action on SB 2077 to give Ige time to negotiate with the UPW, but by Wednesday they were unwilling to wait any longer.
The House voted 43-3 to override the governor’s veto, easily securing the two-thirds majority necessary to overturn Ige’s decision. Reps. Romy Cachola, Calvin Say and Cynthia Thielen voted against overriding the veto. Five representatives were absent for the vote.
The Senate vote was
18-4, narrowly securing the necessary 17 votes needed.
Sens. Les Ihara, Laura Thielen, Donna Kim and Sam Slom, the Senate’s only Republican, voted against overriding the governor’s veto. Sen. Clarence Nishihara and Sen. Glenn Wakai voted yes, but with reservations.
Three senators were excused.
The Senate vote came after about two hours of delays as senators privately caucused in a side room off the chamber floor.
As Sen. Ron Kouchi readied to take the roll call vote, Thielen rose to express “reluctant opposition” to overriding the governor’s veto, noting that an attorney with the Employees’ Retirement System had recently expressed concerns that provisions in the bill could jeopardize the tax-exempt status of the ERS plan.
“I understand that there is a lot of anger in the Legislature that this has come up at the eleventh hour when we have been discussing it for so long. And I know that all of us have been working very hard at trying to find some solution for that,” said Thielen. “Nonetheless, now that that matter is in front of us, I can’t in good conscience just ignore it.”
The Legislature has been trying to verify the concern over the plan’s tax-exempt status with the U.S. Internal Revenue Service, but has yet to receive an answer.
Sen. Rosalyn Baker (D, West Maui-South Maui) and Sen. Josh Green (D, Naalehu-Kailua-Kona), who is also a doctor on Hawaii island, rose after Thielen and urged their colleagues to vote in favor of overriding the governor, arguing that further delays in executing the transfer of the hospitals to Kaiser Permanente was jeopardizing the health care of Maui County residents and visitors.
“We know that Kaiser needs at least eight weeks to complete the transition. If we don’t pass this bill, if we don’t override the governor’s veto, we are very certain that there is going to be another attempt to delay the transition,” said Baker, seeming to reference the HGEA’s threat to join the UPW in suing the state. “If we do that, you can kiss goodbye the effort that has gone in to both Act 103 and the subsequent negotiations. You can kiss that goodbye because I don’t think we will be in a position to be able to deliver health care.”
Green said that the number of doctors available to deliver babies on Maui had plummeted by half in the past three weeks as a result of mounting uncertainties facing the future of the hospital system.
“Those are the uncertainties in my estimation that trump any political uncertainties that we may have,” said Green.
Wes Lo, chief executive officer of Hawaii Health Systems’ Maui Region, said in a written statement that “we are extremely grateful to the leadership of and members of the Hawaii State Senate and House of Representatives for convening a special session to forward the discussions necessary for our hospitals to transition.”
“Not enough gratitude can be expressed to our staff and physicians, who under prolonged, uncertain circumstances continue to work and serve Maui County and its visitors,” Lo said in his statement.
Souki said the privatization effort is “an ongoing battle, and the governor is working on it as well as he can, and our understanding is it’s imminent, it’s about to happen.”
“This is historic in attempting to privatize a state function into a private function in a state that’s heavily unionized, and so the governor faced a lot of challenges, and so did we as we go along in trying to complete this transformation, you can say,” Souki said. “It could have moved faster. You can say part of this is because of frustration, but the frustration is also because there’s a lot at stake.”
