EXCLUSIVE: Taxpayers will pay more as state phases out some private contractors

Published: Oct. 6, 2015 at 9:52 PM HST|Updated: Oct. 6, 2015 at 10:17 PM HST
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HONOLULU (HawaiiNewsNow) - The state is phasing out the use of private contractors for highway landscaping and other maintenance work, costing taxpayers more money and settling two long-time class-action grievances filed by one of the state's most powerful unions, the United Public Workers.

Across Hawaii, landscape workers who are employed by private contractors do routine maintenance of state highway medians and shoulders. The UPW alleged the state unlawfully privatized services that were historically performed by state workers who were unionized employees.

As a result of court-ordered mediation in the case, the state settled grievances filed by the UPW. On July 1, state Labor Director James Nishimoto sent out a memo to state departments saying those private contracts will "…not be automatically renewed at their contract end date."

Departments will only be able to hire private firms for one extra year and must file for an exemption based on factors such as  "… employee safety, (or) unavailability of proper equipment."

"Costs I'm sure will be going up and quality will be going down," said Kevin Mulkern of Mulkern Landscaping and Nursery, a longtime landscaping contractor who's past president of the landscaping contractor association.

"When you take the lowest qualified bid, I believe that saves the taxpayer money.  And you don't have to deal with retirement and some of the other benefits," Mulkern said.

The settlement means state departments will have to create new jobs such as groundskeepers and taxpayers will pay their salaries along with health and retirement benefits.  Mulkern said state workers are not as productive as private sector employees, mostly because they have far more annual vacation days (21), holidays (13; 14 in election years) and sick days (21) compared to the private sector.

State Sen. Sam Slom, the state Senate's lone Republican, said, "Bottom line: it's going to cost the taxpayers more money.  Bottom line:  We're always talking about public-private partnerships and we're talking about getting the best bang for our buck and all that.  I don't think that's the case here."

"The taxpayers, the consumer, the client is always going to pay the highest price and not necessarily get the best service," Slom said, adding that department heads will no longer have the option of routinely hiring private contractors who cost less than full-time state employees.

It's unclear how many new state jobs will be created but they range from groundskeepers statewide who clean and trim the grass along highways to those who perform air conditioning maintenance.  The state could not provide an estimate of how many contracts are affected, how many new state positions might need to be created and how much money that could cost taxpayers.

One grounds keeping contractor told Hawaii News Now he's in the middle of a five-year state contract and has not been notified about any changes by the state highways division.

State officials said it could take a year or more to create and fund positions, as well as interview and hire people for those new state positions.

A letter of understanding signed by state Labor Director James Nishimoto and UPW leader Dayton Nakanelua June 29 said "the union will assist the departments for successful passage of their budget requests" to pay for the additional employees that will be needed as a result of the settlement.

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