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Civil Beat asked whether the counties fought hard enough in the binding arbitration case regarding the SHOPO contract.

Probably not. One reason may be that the binding arbitration law is flawed and skewed against the counties and the state. The flaw may be seen in the chairman of the arbitration panel’s statement:

“Angelo dismissed this argument, saying he had “no authority or any inclination to adjust relationships with other labor unions” and that “the remedy for the perceived problem, if any, should be addressed during those parties next foray into the collective bargaining process.”

Arbitrator Angelo’s statement reveals why the binding arbitration law puts the city or state at a disadvantage: the arbitrators have the authority to address only the contract before them and nothing else. Whereas the mayors’ or governor’s negotiating strategy must take into account the impact of any single contract on all union contracts as a whole.

Thus, in the SHOPO case it is no surprise that the arbitrators found the city could afford the pay raises for our police officers. Viewed in isolation, the city or state is able to fund almost any contract. As one arbitrator said in a past case – the state can “raise taxes.”

Inevitably what will happen is the other public worker unions will use the SHOPO contract as a benchmark for their respective contracts. This is likely to happen when the Firefighter’s union negotiates for their upcoming contract. Furthermore, in some cases the unions have so-called “favored nations” clauses in their contracts, which in this case would entitle them to the same pay raises and benefits awarded to SHOPO.

Collective bargaining works best when both sides have equal leverage. Because of its limited scope, the binding arbitration law clearly upsets that balance in favor of the unions.

By my second term, we successfully persuaded the Legislature to repeal the binding arbitration law. This leveled the playing field. The union had the right to strike and the governor had the right to bargain for concessions that benefited the public. This can be a painful, difficult process – but that is what true collective bargaining is all about — give and take. Unfortunately, when Republican Linda Lingle was elected, the Legislature, angered by Lingle’s criticism and under heavy lobbying by the unions, reinstated the binding arbitration law.

The city and state must do a better job explaining to the Legislature and public the stakes in the collective bargaining process. The focus is always only on wages — rather than the cost of wages and fringe benefits. For example, state and city workers enjoy some of the most generous fringe benefits in the nation: 21 days sick leave, 21 days vacation and 14 paid holiday and where available parking at only $60 per month. (Compare these benefits to other western states.) These costs are recurring and should be quantified and made transparent to give workers and the public a true picture of the costs involved.

For example, few know that the state recently agreed to increase its share of paying for employee health benefits premiums from 50 percent to 60 percent. How much did that extra 10 percent cost the state? Well, I am told that the health insurance premiums for state workers amount to approximately $800 million annually. Therefore the additional 10 percent will increase the state’s share from $400 million to $480 million a year — an increase of $80 million per year. Furthermore, that additional 10 percent applies to any increase in the future costs of healthcare premiums. Thus, if healthcare costs increase from $800 million to $900 million a year – the additional cost of 10 percent will increase from $80 million to $90 million.

What could the state do with the $80 million? For starters it could fund the Governor’s proposed and worthy early childhood education plan entirely with state funds and still adhere to the doctrine of Separation of Church and State by eliminating its ill-conceived partnership with private, religious-based schools.

Or it could be used to convert our public schools into a full 12-month system, increasing the number of school days for our children and converting teaching to a year-round occupation with appropriate increases in salaries. As I recall in the past even the HSTA supported this idea but funding it has always been the biggest obstacle.

Political leaders should keep in mind that increases in pay and fringe benefits are not one-time propositions — these costs carry over and compound forever. To deal with this problem, the politicians must either find ways to increase revenues or cut spending — or a combination of both.

I know our current Governor agrees the law is skewed against the state. I suspect our four mayors feel the same way about its impact on the counties. Unfortunately, there is a looming election coming up and the prospects of persuading the Legislature to repeal the law are slim and none.

About the author: Ben Cayetano was governor of Hawaii from 1994 through 2002.

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