Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committees on Transportation, Military Affairs, and Government Operations and Labor, to which was referred H.B. No. 510, H.D. 2, entitled:

beg leave to report as follows:

The purpose of this measure is to encourage the process of managed competition as a means of improving the efficiency of government operations in accordance with existing statutory and constitutional requirements.

Your Committees received testimony in support of this measure from the Hawaii Boaters Political Action Association.

Testimony in opposition to this measure was submitted by the Department of Human Resources Development, the Office of Collective Bargaining, the City and County of Honolulu Department of Human Resources, the Hawaii Government Employees Association, and United Public Workers.

In Act 230, Session Laws of Hawaii (SLH) 1998, section 6, "managed competition" was adopted as a public policy to enable state and county governments to implement public—private competition for government services through a process which "determines whether a particular service can be provided more efficiently, effectively, and economically by a public agency or a private enterprise." A committee which was created to examine the appropriate means of implementation submitted its report and recommendations to the Governor and Legislature in 1999 and 2000.

In Act 253, SLH 2000, section 104, the Office of Collective Bargaining was redesignated the "Office of Collective Bargaining and Managed Competition" and delegated authority to implement the managed competition process through the established process of collective bargaining under chapter 89, Hawaii Revised Statutes (HRS). In Act 90, SLH 2001, section 3, each of the counties were granted comparable authority and powers to "coordinate and negotiate the terms and conditions of the managed competition process" on behalf of the counties with exclusive representatives of affected public employees.

Since the 2001 regular session, the people of Hawaii have elected a new Governor who promised not to lay off public employees and who reaffirmed a commitment to a process of joint decision making to determine their wages, hours, and terms and conditions of employment. In testimony on this measure, the chief negotiator from the Office of Collective Bargaining and Managed Competition has stated that the Governor has directed him to implement policies and procedure for managed competition "in accordance with the Legislature’s original intent." That intent was succinctly stated in relevant portions of Act 230, SLH 1998, as follows:

In accordance with the foregoing, your Committees have amended this measure to replace its contents with a provision to repeal Part II, Act 90, SLH 2001. Part II of Act 90, SLH 2001, which preempts chapters 46, 76, 77, 78, 89 and 89A, HRS, is inconsistent with and contradictory to public policies favoring the managed competition process as originally enacted in Act 230, SLH 1998, and implemented in both Act 253, SLH 2000, and the remaining provisions of Act 90, SLH 2001. Your Committees further believe that Part II of Act 90, SLH 2001, is an unconstitutional infringement of the right of public employees to engage in collective bargaining as recently interpreted by the Hawaii Supreme Court. AFSCME Local 646, AFL—CIO v. Yogi, 101 Hawaii 46, 62 P.3d 189 (2003).

As affirmed by the records of votes of the members of your Committees on Transportation, Military Affairs, and Government Operations and Labor that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 510, H.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 510, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.