The Lingle administration and the Hawaii Government Employees Association reached a tentative agreement yesterday on a new two-year contract, ending months of frustrating and often confrontational negotiations over how much labor should have to sacrifice to help close the state's budget deficit.

The proposed contract, which will now go to rank-and-file union members for ratification, is the first time the state's largest public-sector union has conceded to a significant salary reduction.

The contract calls for 18 furlough days this fiscal year and 24 furlough days next fiscal year for most state workers. The furloughs amount to about an 8 percent pay cut.

HGEA educational officers on 10-month schedules at the state Department of Education would take 17 furlough days this fiscal year and 17 furlough days next fiscal year, according to a union summary of the agreement.

HGEA's nonfaculty personnel at the University of Hawaii would have temporary 5 percent pay cuts instead of furloughs and would have their existing salaries restored in July 2011. HGEA workers at the Hawaii Health Systems Corp., the state's public hospital system, would also face temporary 5 percent pay cuts.

Counties would have the option to order up to 18 furlough days this fiscal year and 24 furlough days next fiscal year for county workers represented by the union. County mayors, however, have said they will likely not need to call for furloughs until next fiscal year.

Under the proposed contract, the Lingle administration would not pay any additional costs for health care for state workers, so state workers will have to cover a 23.4 percent increase in premiums in effect since July.

Counties would continue to cover 60 percent of county worker health care costs this fiscal year — absorbing most of the premium increase — but may negotiate supplemental agreements with the union next fiscal year if costs rise substantially.

Union leaders told members they would pursue the issue of health care costs with the state Legislature next session.

The HGEA will put the contract before its 29,600 members in a ratification vote scheduled for today, tomorrow and Monday. The union hopes to announce the results on Monday evening.

"It has been the intent of the HGEA and its negotiating team members to reach an agreement with the employers on a furlough plan that our members could review and vote on," Randy Perreira, the HGEA's executive director, said in a statement. "We strongly encourage every HGEA bargaining unit member to take time over the next few days to review the agreement, and vote on this most important issue."

Gov. Linda Lingle, in a statement, said she was pleased. "We believe this contract is in the best interest of the state and its employees and we hope the employees will ratify the contract," she said.

MAYORS SAY OK

The Lingle administration and the HGEA have been in binding arbitration but have continued to negotiate in an attempt at a compromise. If union members reject the proposed contract, the two sides would either go back to the bargaining table or wait for the arbitration panel to resolve the dispute in December.

All four county mayors signed off on the proposed contract. Under state labor law, the governor needed at least one mayor to endorse the offer because it involves county workers.

Honolulu Mayor Mufi Hannemann said a settlement is preferable to arbitration.

"We were consistent in pushing for a settlement from the very beginning, rather than waiting for the protracted arbitration process and are glad the willingness of management and labor to collaborate and compromise led to the successful conclusion of the negotiations," he said in a statement.

"The mayors had an opportunity to scrutinize the terms and conditions of the pact and we're glad we've been able to ensure we have an agreement conducive to our county-specific needs."

Big Island Mayor Billy Kenoi described the negotiations as difficult.

"These tough economic times call for sacrifices by all in both the public and private sectors," he said in a statement. "The objective has always been to reach an agreement that continues essential public services, and is also fair to all."

BUDGET SHORTFALLS

The Lingle administration has projected a budget deficit of $1 billion through June 2011. Counties have passed balanced budgets this fiscal year without furloughs or layoffs but are anticipating significant shortfalls next fiscal year, when the impact of a decline in property taxes because of the recession hits.

Lingle has said labor savings are critical to balance the state budget, but union leaders said they do not believe state workers should be expected to close the bulk of the deficit.

The Lingle administration and the Hawaii State Teachers Association agreed to a new contract in September that includes 17 furlough days a year for teachers on 10-month schedules and 21 furlough days a year for teachers on year-round schedules.

The University of Hawaii Professional Assembly last week voted down a contract offer from the university that included a 5 percent pay cut. Negotiations between the university and faculty are continuing.

The Lingle administration and the blue-collar United Public Workers are also still in contract talks. The state and the UPW's public-safety unit are in binding arbitration.

Lingle has not publicly estimated how much the state will save from the labor contracts with the HSTA and the HGEA, but the savings will be short of the governor's original order of three furlough days a month — or 36 furlough days a year — for state workers.

Unions successfully challenged the governor's initial furlough order in court as an unconstitutional violation of collective bargaining. The court ruled that furloughs should be subject to negotiations with the unions.

Lingle has also ordered 1,100 layoffs of state workers starting in November and has warned of a second round of layoffs.

HEALTH CARE COSTS

State lawmakers will likely be asked by unions next session to consider increasing the state's contribution to state worker health care premiums.

Some lawmakers have also suggested that the state tap the hurricane relief fund or raise the general-excise tax so that teachers do not have to take furlough days away from classroom instruction.

State Senate Minority Leader Fred Hemmings, R-25th (Kailua, Waimänalo, Hawaii Kai), who has been critical of union leaders, offered praise for both Lingle and Perreira for reaching a tentative agreement that could help with the state budget.

"It takes two to tango. It takes two to dance," he said. "And they both did a good job."