Gov. Linda Lingle accused majority Democrats yesterday of giving government labor unions a "false sense of hope" that the tax increases they have approved would help soften wage and benefit cuts in collective bargaining.

The Republican governor, who plans to veto the tax increases at a public ceremony in the state Capitol rotunda at 3:30 p.m. tomorrow, wants to achieve $278 million in labor savings through the negotiations. Lawmakers have refused to incorporate her figure in their two-year budget, arguing it is premature with the talks in progress.

But Lingle said lawmakers have inserted themselves into the negotiations by passing the tax increases.

"I think it's important for the public to link together these tax increases that the Legislature voted for and my ongoing negotiations because the legislators are giving our public employees a false sense of hope by telling them, 'You don't need to negotiate seriously with the state. We're going to get you all the money you need. We're going to raise taxes. You're going to have what you need to be kept whole,' " she said at a news conference at the state Capitol.

"And that's simply not going to occur."

State House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo Valley, Wilhelmina Rise), said the governor is wrong. He said the tax increases were reluctantly approved to help balance the budget, not to help labor unions in negotiations.

"That is incorrect," Say said of Lingle's characterization. "Whatever tax increases we have today was just to balance the budget."

Lingle also said yesterday that the state is making progress with two of the four government labor unions, which she declined to identify, and may have a tentative contract agreement with one union next week.

Union leaders, in a joint statement, countered that settlements are not imminent.

"To date, no formal proposals have been made to any of the four unions, leaving them with nothing to negotiate," according to the Hawai'i Government Employees Association, the Hawai'i State Teachers Association, the United Public Workers and the University of Hawai'i Professional Assembly.

The Lingle administration and unions have been discussing potential furloughs of state workers. The administration has also said it does not want to pay additional costs for worker healthcare benefits.

Union leaders have told their members that an interim plan by the state Employer-Union Health Benefit Trust Fund would increase worker medical premium costs by 23.7 percent in July. The interim plan would apply on a month-to-month basis until a permanent plan is approved.

The state shares premium costs with workers on a 60 percent to 40 percent split. Lawmakers did not include additional money for worker medical premiums in the budget, one union leader said, so workers would have to absorb the entire increase.

Lingle said unions have an incentive to settle before the state Council on Revenues meets later this month to update the state's revenue forecast because there could be even less money for labor if revenues again decline.

OTHER VETOES

At her news conference, Lingle said lawmakers missed opportunities by not reaching agreement on her highway modernization bill and a bill that would have created a commission to oversee telecommunications and cable services and promote broadband expansion.

Many of the projects in the highway modernization bill are included in the budget, however, and lawmakers will likely revisit the broadband idea next session.

Lingle, who will discuss potential vetoes this afternoon in a Web address, plans to veto bills that would increase state income taxes on the wealthy, the hotel room tax, and the conveyance tax on the sale of luxury homes. She has not decided whether to veto tax increases on cigarettes and other tobacco products.

House and Senate leaders said they believe they have the two-thirds' votes necessary to override the vetoes and have extended the session two days, until Friday, for possible override votes.

FINAL VOTES CAST

Yesterday, the House and Senate cast final votes on dozens of bills and prepared to approve the budget and other finance bills tomorrow.

The House approved a bill yesterday that puts new limits on high-technology tax credits known as Act 221. Investors would be limited to using the credits to write off 80 percent of their state tax liability instead of 100 percent. Investors would also be limited to a one-to-one return on the credits rather than taking multiple credits by trading with Mainland investors for equity in technology projects. The Senate has set a final vote tomorrow.

Both the House and Senate defeated amendments yesterday that would have restored the multiple return on the credits, which many in the investment community believe is crucial in attracting Mainland seed money for state technology projects.

The House and Senate passed a bill that would allow workers to organize labor unions at companies when a majority sign union cards, an alternative to secret ballot elections. The bill has become a local proxy for a national fight between business and labor interests, but the final version limits the provision to companies with annual gross revenues of over $5 million.

Most of the state's private-sector workforce is covered by federal labor law, so the bill only covers a fraction of mostly agricultural workers under state labor law.

State Sen. Dwight Takamine, D-1st (Hamakua, S. Hilo), said he believes greater union representation would lift the quality of life for workers who are likely to receive better wages, healthcare and pension benefits.

"But I think it really becomes symbolic," he said of the bill's narrow scope.

State Sen. Sam Slom, R-8th (Kahala, Hawai'i Kai), said Hawai'i already has high union representation. According to the federal Bureau of Labor Statistics, Hawai'i, at 24.3 percent, was second only to New York (24.9 percent) for union membership last year. The national average was 12.4 percent.

Slom said the bill is less offensive than previous versions but concluded it still threatens the secret ballot: "If it oinks like a pig, it makes bacon like a pig, it's still a pig. It's still a bad bill. It still is anti-business. It's anti-investment climate."

The House also approved a bill that would impose a 5 percent pay cut and freeze salaries through 2011 for lawmakers, the governor, the lieutenant governor, department directors and judges. The bill, up for a final vote in the Senate tomorrow, is a recognition that state workers will likely receive wage and benefit cuts and that top officials should share in the sacrifice.