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As Gov. Neil Abercrombie testified before a standing-room only crowd at the Capitol Friday, people laughed dismissively and mocked his comments, especially when he described himself as a public employee. At one point, a man audibly said, “You’re full of shit.”
In his first appearance before a legislative committee, the governor opened himself up to the Senate Judiciary and Labor Committee to support two bills that will help address the state’s $844 million deficit:
Senate Bill 1268 would eliminate state-funded Medicare Part B reimbursements for retirees. It’s expected to save the state $42 million next year and $47 million in fiscal 2013 and would affect approximately 30,100 state and county retirees and dependents.
Senate Bill 1269 would change the definition of “compensation” for calculating the state’s contributions toward pensions to no longer include such things as overtime or lump sum payments. The move is expected to save the state $13 million and the four counties $19 million in fiscal 2012.
Abercrombie opened his testimony on both bills saying, “I’m speaking as a public employee this morning. I’ve devoted my life to being a public employee.”
That comment immediately drew dismissive laughs from the crowd, which, judging by the logos on their polo shirts and T-shirts, included members of the state’s major unions: Hawaii Government Employees Association, the Hawaii State Teachers Association, the United Public Workers union and the State of Hawaii Police Officers union.
Reaction to the rest of Abercrombie’s testimony was peppered with more insults as he was called an “idiot” and “a jerk.” While the comments could be heard from within the crowd, it was unclear whether Abercrombie or any of the senators took note.
The conference room’s 60 seats filled up well before the 9:15 a.m. hearing started. About 40 other people stood along the walls or in the back of the room. Some spilled into the main hallway. Many carried blue-and-white signs that read “HGEA Retirees.”
Sen. Clayton Hee, chairman of the Judiciary Committee told the crowd his committee had received more than 100 pieces of testimony for each of the two bills.
“I can’t recall one piece in support,” Hee said. “It’s not an epiphany to me how many of you probably feel … Unless you came to support the bill, then we’d like to hear from you.”
That comment also elicited laughs from the crowd, as one person scoffed, “He’s a comedian, too.”
A total of nine bills were on the agenda, but testimony for Medicare and pension cuts ran for two hours before the hearing was adjourned and scheduled to reconvene Monday at 9 a.m.
Abercrombie, Kalbert Young, the state’s director of Budget and Finance, and a representative for the City and County of Honolulu testified in support of the measures.
The following public union leaders spoke in “strong opposition:” HGEA Executive Director Randy Perreira; UPW Director Dayton Nakanelua; University of Hawaii Professional Assembly Executive Director J.N. Musto; SHOPO President Tenari Maafala; the Hawaii Fire Fighters Association; and the Hawaii State Teachers Association.
Abercrombie asked public employees to pull together, noting the $9 billion unfunded liability facing the Employees’ Retirement System, and the fact that the Hawaii Employer-Union Health Benefits Trust Fund is on the brink of bankruptcy.
“The plain fact of the matter is we have to decide if we can pay anybody anything at all. We’re talking about the very stability of the state, our capacity to pay pensions at all, to pay medical premiums at all,” he testified. “We are looking our survival straight in the face, and everybody has to do their share. We cannot have people in the canoe with their arms crossed watching everyone else do the paddling.”
State law requires retired civil servants after age 65 to enroll in the Medicare Part B program if they are covered under the Hawaii Employer-Union Health Benefits Trust Fund. Young, the budget director, said 22,673 retirees and 7,464 spouses and dependents are reimbursed for these premiums.
“A few of us are benefiting from this, but given the context of what’s necessary to stabilize the pension system and medical reimbursement system, this simply cannot continue,” Abercrombie said.
Hee and Sen. Maile Shimabukuro asked about possibly exempting retirees who depend on the reimbursements. Shimabukuro suggested applying a threshold for those at 125 percent of the federal poverty level.
“There’s a start,” Abercrombie replied. “The question here today is are we going to do it, then we can decide how to go about it.”
Abercrombie ended his testimony on SB 1268 saying: “I don’t think it’s fair. I did not earn it, it isn’t anything I can look you in the eye and say I deserve to have if it requires other employees to pay for me.”
When he finished, two audience members were heard saying, “You’re full of shit,” and “What a jerk.”
After Abercrombie’s testimony, he left the room. HGEA’s Perreira was called to testify next and was greeted with hearty claps and cheers.
Perreira talked about the government’s “obligation” to pensioners.
“(Abercrombie’s) suggestion that this is not an earned benefit — I’m offended for the people behind me who worked 30, 40 years, and are living the fulfillment of a promise … that upon retirement their medical would be paid for,” Perreira said. “When I retire, I hope my three kids will be paying for me, because that’s how our system works. We’ve made a social contract with these individuals.”
When Shimabukuro asked Perreira about the governor’s comments that some retirees don’t need this benefit, he quipped: “He’s got a job, though, and he’s got multiple pensions.” That produced loud claps and cheers from audience.
Also called in to testify was Hawaii Attorney General David Louie, who submitted an informal opinion on SB 1268 late last night. Louie shared concerns about possible court challenges to eliminating Medicare reimbursements.
“If there is a challenge, we will defend the bill,” Louie testified. “I can’t predict what the court would do, what the outcome of a lawsuit might be, but if the bill moves forward in it’s current form … there’s concern there might be a court challenge.”
As testimony dragged on, Hee said, “I think we’ve exhausted the discussion … It’s obvious we won’t be making a decision today. You guys don’t have to keep saying this, we get it, we’re trying to find a solution, we do understand where you’re coming from, you may not believe it, but we do.”
Under the other proposal, SB 1269, compensation such as overtime, lump sum payments and pay for stand-by duty would not be counted toward pension contributions from the state after July 1. Employer contributions are based on a percentage of compensation with current rates at 19.7 percent for police officers, firefighters and corrections officers, and 15 percent for all other employees.
The bill would lower costs, Young said, “The vast majority of savings would be attributable to overtime.”
Abercrombie told the committee about his employment as a probation officer, saying “overtime is overtime, base pay is base pay.”
“Overtime has nothing to do whatsoever with what you earn in pension,” he said. “As a public employee, as a colleague, I’m speaking for what I believe is the silent majority of this state. This is my fourth decade in public service.”
Following that statement, a man was heard saying, “This guy’s an idiot.”
ERS Administrator Wes Machida said the move would save the fund $500 million over 30 years, but he had no position on the bill.
Senators didn’t buy that response. “It’s difficult for me to believe this is something you take no position on,” Hee said.
Machida replied that the ERS trustees are expected to discuss the bill at their monthly meeting Monday. Machida told Hee he assumes the trustees also will have no position.
“Give them this message,” Hee told Machida. “If they take no position, then they shouldn’t complain about the unfunded liability.”
Honolulu Police Captain Cary Okimoto from HPD’s Human Resources department testified against the measure, saying it “would fracture operations.”
SHOPO’s Maafala also testified against SB 1269, saying the police department does not abuse overtime and that “each hour of overtime is just.”