Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committees on Labor and Tourism and Intergovernmental Affairs, to which was referred S.B. No. 849 entitled:

beg leave to report as follows:

The purpose of this measure is to restrict an arbitration panel's ability to factor in outside sources of revenue when determining salary and wage adjustments in public sector collective bargaining agreements.

Testimony in opposition to the measure was received from the Hawaii Government Employees Association and the United Public Workers union.

Specifically, the measure disallows the use of funds that:

This measure also restricts an arbitration panel's ability by limiting the comparison of compensation packages to similar jobs in Hawaii, and by including benefits as a part of the comparison. The measure does allow for comparisons on the national level if a bargaining unit has historically recruited on a national level. In addition, other factors that are normally or traditionally taken into consideration in the determination of wages, hours, and conditions of employment through the public or private sector collective bargaining process would be disallowed.

Your Committees find that under existing law, if a public sector labor dispute over a salary or wage increase goes before an arbitration panel, the arbitration panel may look at a variety of circumstances under which the employer would be able to obtain funds to pay for any salary or wage increase. An arbitration panel could theoretically award a salary or wage increase to employees based on the possibility that the public employer would be able to afford the salary or wage increases if taxes or user fees were raised. This outcome would not be in the best interest of the State in that salary or wage increases would dictate other public policy decisions.

However, your Committees also understand that public employees do have a right to reasonable pay increases for the services they perform and that careful consideration must be given to any amendment to the collective bargaining law so as not to upset the delicate balance contained therein.

In light of these findings, your Committees have amended the measure by deleting all the proposed amendments except for the amendment that disallows an arbitration panel from using the reallocation of funds from existing programs or current levels of service previously authorized by the Legislature for the purpose of funding new or enhanced collective bargaining cost items.

Your Committees believe that the amended measure proposes a balanced and thoughtful approach to resolving the issue of what economic factors are within the domain of an arbitration panel and what remains in the province of legislative authority.

As affirmed by the records of votes of the members of your Committees on Labor and Tourism and Intergovernmental Affairs that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 849, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 849, S.D. 1, and be referred to the Committee on Ways and Means.