UPDATED 4/7/11 6:27 p.m.

Hawaii’s largest and most influential union has agreed to a 5 percent salary cut with the state of Hawaii and its four counties.

The agreement, announced jointly by the Hawaii Government Employees Association and Gov. Neil Abercrombie, will likely spur settlement with other public-sector union contracts and help budget deliberations between the governor and the Hawaii Legislature.

The state faces a $1.3 billion deficit over the next two fiscal years and Abercrombie had based his budget plan in part on winning a 5 percent pay cut from public unions.

The state says the agreement will save the state about $124 million over the next two fiscal years.

Details of the two-year contract, which begins July 1, include the following:

• A 5 percent reduction in base pay for public employees.1

• An equal contribution — 50-50 — for public workers’ health benefits between public employees and the state and county governments.

  1. An earlier version of this article reported that there was a promise of no layoffs or furloughs, per the governor’s press release. However, Honolulu Mayor Peter Carlisle said there is no promise of no layoffs.

“Since the beginning of our administration, we have talked about shared sacrifice as the pathway to changing Hawaii,” Abercrombie said in a press release. “Today, the Hawaii Government Employees Association stepped forward to do their part by making a sacrifice to help all people of Hawaii. In these worst of fiscal times, a new era of teamwork and hope has begun.”

Honolulu Mayor Peter Carlisle said he had concerns about the agreement.

“During my discussions with Governor Abercrombie on the phone this morning regarding the HGEA tentative agreement, I was told about the 5 percent reduction in base pay and the 50/50 EUTF contribution,” Carlisle said in a statement from his office. “I was also told of other provisions that I could not agree with, including additional paid time off for government workers.

“The provisions that I could not agree with were not included in the Governor’s press release. I need to find out in writing the truth and the whole truth about the provisions of the tentative agreement. Once we have received all of the provisions in writing, we will need to determine the financial impact on the City.”

The Republican Party issued a statement claiming that the union had rolled over for Abercrombie.

“Randy Perreira and the HGEA fought Governor Lingle tooth and nail over reducing labor costs and now he is just rolling over for Governor Abercrombie with seemingly little regard for the rank and file,” the statement said. “The question for taxpayers is, what else did Governor Abercrombie promise the HGEA in return for this deal and how much will it cost us in the future?”

HGEA issued a statement saying it will not comment publicly on the details of the agreement until it’s notified its membership.

The agreement ends the two-day-a-month furloughs in the current contract that resulted in a 10 percent decrease in base pay and shutdown of government services.

Abercrombie made headlines in December when he promised to restore the 60-40 health-care split only weeks after being sworn into office — an $18 million concession for the period from March 1 to June 30 this budget year. He said at the time he wanted to maintain the split for the next two years, but the new contract calls for the split to revert to 50-50. The 10 percent difference would have cost $30 million a year, Senate Ways and Means Chairman David Ige said.

The 5 percent pay cut will certainly help lawmakers fill the budget hole, but it still won’t achieve the savings the Senate is counting on.

The Senate Ways and Means Committee on Monday advanced a draft budget that cut $654 million from Abercrombie’s proposed operating budget — with about $260 million of that from reduced labor costs equivalent to the current two-day-a-month furloughs that are set to end June 30.

Various state departments have previously said twice monthly furloughs are equivalent to pay cuts of between 8 percent and 11 percent.

Asked about the HGEA settlement, House Finance Chairman Marcus Oshiro: “Sounds good. I am waiting to see the details.”

The agreement, which comes just one day after Abercrombie addressed HGEA members at a pro-union rally Tuesday at the Capitol will require a ratification vote by HGEA’s more than 25,000 state and local government employees.

Total HGEA membership is about 42,000 members.

HGEA was one of five unions whose contracts expire at the end of June. The others include:

  • United Public Workers
  • Hawaii State Teachers Association
  • State of Hawaii Organization of Police Officers
  • Hawaii Fire Fighters Association

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