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UHPA Legislative Update: EUTF, GET and UH Funding Reduction

Over the course of the remaining six weeks of the legislative session there will be increased efforts among public sector labor unions to influence the legislature to take action that fixes the broken EUTF and reduces the decline of state revenues to forestall more public sector job loss. Three pieces of legislation are critical to these efforts.

Employer Union Trust Fund 

SB 2849 S.D.2 addresses the overall reform of the EUTF and contains the following provisions:

The bill includes all thirteen public sector bargaining units and allows for shared benefit plans under the same state of county employer. This would allow UH to provide a benefit plan that covers all employees subject to negotiations with the unions.

The fiduciary responsibility of a benefit fund trustee is to the beneficiaries not the Executive Branch of state government.

Negotiated contributions placed in the trust would be permanently segregated from the employer and the union remaining under control of the trustees.

The trust would appoint an independent legal counsel and plan consultants who are not obligated to the employer. This would stop the state attorney general from making decisions that benefit the state but not the beneficiaries.

EUTF trustees would be appointed by the respective unions and the employers unlike the current EUTF where the Governor appoints all trustees.

There would be negotiations on benefit coverage and contributions which will end the limited bargaining on fixed dollar contributions to a plan. (See HB 2937 H.D.2 S.D.1)

EUTF would continue to be an umbrella for providing health insurance for retired public employees, employees excluded from bargaining units under H.R.S. Chapter 89 and elected legislators.

This bill should go to conference committee.

HB 2937 H.D.2 S.D.1 This legislation is necessary to complete the reform of EUTF by making fringe benefits and contributions for health care a mandatory subject of bargaining. Benefits and contributions would be subject to binding arbitration for those public section unions that do not have the right to strike. UHPA has the right to strike so benefits and contributions would be subject to impasse procedures under this proposed legislation.

This legislation is referred to the Senate Ways and Means Committee with no hearing scheduled.

General Excise Tax

HB 2877 has been amended to provide for a 1% raise in the GET which would generate approximately $600 million in increased revenue for the state. The full text of HB 2877 is not yet available. Legislative sponsors indicate they will propose an earned income tax credit for low income wage earners to offset an increase in GET.

A coalition of groups including the Interfaith Alliance, HGEA, Hawaii Alliance for Retired Workers, PHOCUSED, UPW, Ironworkers, and UHPA are working to advance this moderate increase in the GET as a part of a short term solution to help increase revenues.

UH Budget Cut $10 Million Dollars by House Finance Committee

The House Finance Committee, chaired by Representative Marcus Oshiro, has proposed a $10 million dollar reduction in general funds to UH.

As reported in the Honolulu Advertiser on March 5, 2010 “Oshiro, expecting complaints about the $10 million cuts to the university, noted that the new contract with the faculty union contains temporary pay cuts that will eventually be restored and pay raises in future years. Other state workers who agreed to pay cuts to help close the deficit received no similar promises. He also said the university has the option to raise tuition fees to generate new revenue.”

The budget process is not complete with expectations of significant changes in the proposal advanced by the House Finance Committee.