Lawmakers in special session after governor vetoes Maui hospital workers bill

Maui Memorial Medical Center

State lawmakers met in special session Tuesday after Gov. David Ige vetoed a bill that offered benefits to workers at three Maui hospitals that are being taken over by Kaiser Permanente.

SB 2077 Relating to Separation Benefits: This bill would have offered benefits to Hawaii Health Systems Corporation (HHSC) employees who are facing the abolishment of their positions or workforce restructuring at Maui Region hospitals due to the transition from a state operation to a private operation.

The governor outlined three primary reasons for his veto:

  1. The Employees Retirement System (ERS) believes this bill jeopardizes its tax-qualified status because it allows the affected employees to choose between a lump-sum cash payment that is taxable as wages, and a special employer subsidized early retirement benefit. Under the IRS code, sections governing the state’s ERS plan, this is not permitted and therefore it threatens the plan’s tax-exempt status.
  2. Affected employees were given a lump-sum cash payment upon separation from state service. However, the bill does not appropriate funds for this purpose. Nor does it provide authority to Hawaii Health Systems to make the payments.
  3. Finally, the bill adds an additional unfunded liability of about $17.2 million to the ERS and $18.4 million to the Employer Union Benefits Trust fund (EUTF) to cover Maui employees separated from state service. This undermines the state’s moratorium on enhanced benefits and puts the state’s long-term financial plan in jeopardy because the state’s long-term financial position is judged by bond rating agencies based upon the state’s outstanding unfunded liabilities. Adding to the unfunded liabilities raises concerns for these agencies, about the state’s commitment to financial sustainability.

“This transition to a new system of care has never been done before. It is complex, and there are multiple stakeholders and issues at play. I have exercised my Constitutional duty to veto the bill and submit a remedy so the transition can move forward. My proposed cure remedies legal, technical and fiscal issues while respecting public employees and the collective bargaining process as the employees separate from state service. It is a path forward,” said Ige.

Supporters of the hospital’s privatization say this is a setback that’s only hurting the public.

“The bottom line is that on our neighbor islands, there are people who are going without care. They need it desperately, including homeless people who don’t have the psychiatric services they need,” said Kelii Akina, Grassroot Institute of Hawaii.

Lawmakers say they will not override the governor’s veto, but will instead work toward an agreed-upon solution that supports hospital employees.

“They probably never intended or thought that would happen to them, so the state really has an obligation to try to treat the workers who are being displaced fairly,” said Rep. Scott Saiki, D, House Majority Leader.

The Legislature will reconvene at 11 a.m. Monday to take up amendments to the bill. The recess will also give time for the governor to negotiate a settlement with the UPW in its lawsuit objecting to the transition.

A final vote on the amended bill is expected on Wednesday, July 20.

In all, the governor vetoed seven bills, including one relating to Airbnb.

The bill would have allowed online lodging services to collect taxes. Ige’s concern is that the bill would encourage illegal rentals.

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