Lawmakers override governor’s veto of Maui hospital workers bill

Maui Memorial Medical Center

The State House and Senate voted Wednesday to override Gov. David Ige’s veto of SB 2077 to preserve the management transfer of three state-run Maui County hospitals to Kaiser Permanente.

SB 2077 Relating to Separation Benefits: Authorizes HHSC employees facing position abolishment, reduction-in-force, or workforce restructuring to opt to receive either severance benefits or a special retirement benefit in lieu of exercising any reduction-in-force rights. Requires the State to pay a monthly contribution for employees separated from service as a result of Act 103, Session Laws of Hawaii 2015.

Last year, state lawmakers authorized the privatization of Maui Memorial Medical Center, Kula Hospital and Clinic, and Lanai Community Hospital, and the state reached an agreement in January to have Kaiser Permanente operate all three.

SB 2077, now a state law, authorizes severance benefits or early retirement incentives for employees who would be directly affected by the impending privatization.

Ige vetoed the bill, citing concerns about taxes and liabilities for the state.

Lawmakers met in special session to try and hash out the details, but ultimately, they said, they were concerned that if they did not override it, the transfer would be in jeopardy, along with the health and safety of Maui residents and visitors.

“We are extremely grateful to the leadership of and members of the Hawaii State Senate and House of Representatives for convening a special session to forward the discussions necessary for our hospitals to transition,” said Wes Lo, Hawaii Health Systems Maui Region CEO. “Not enough gratitude can be expressed to our staff and physicians, who under prolonged uncertain circumstances continue to work and serve Maui County and its visitors. Although we still await a decision from the 9th Circuit court, we remain hopeful as we continue working to establish our partnership with Kaiser and creating a better hospital system for Maui Nui.”

Meanwhile, Ige stands by his decision, saying in a statement that “this transaction must be done correctly for the common good. The concerns expressed in my veto message have not changed. Three areas of concern remain:

  1. The bill jeopardizes the Employees Retirement System’s tax exempt status.
  2. The bill does not appropriate funds for lump-sum cash payments for affected employees.
  3. 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). This puts the state’s long-term financial position, along with its bond ratings in jeopardy. Bond ratings determine what the state pays in interest on borrowed funds.”

The hospital transfer would be the largest privatization of public facilities in state history.

Ige says he is conferring with the attorney general to assess and evaluate the impact of the veto override, while continuing to work in good faith with the UPW to bring resolution to the federal court injunction and to finalize the details. “We are close to an agreement,” he said.

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