The Hawai'i Government Employees Association's political investment in Mufi Hannemann's campaigns for Honolulu mayor is paying dividends as HGEA presses for big raises in its salary arbitration with the state and counties.

Hannemann has publicly broken ranks with the state and other counties in hearings before a three-member arbitration panel, saying he's willing to pay at least twice as much as the 2-percent raises in each of the next two years offered by the state.

HGEA is seeking 11 percent a year in general wage hikes and step increases. Hannemann's solo riff virtually assures that the union, which represents some 22,000 white-collar state and county workers, will get more than if the employers had stuck together.

The stakes are huge: The state calculates that its proposal would cost $133.5 million over two years while the union's would cost $588.7 million.

Contracts with 12,500 public school teachers and 8,000 blue-collar workers are also up, which means that big settlements could eat up most of the state's $724 million budget surplus, leaving little for initiatives in education, affordable housing and other public priorities.

The state and counties have previously presented a united front in labor negotiations. The strategy in binding arbitrations is usually to start with a low offer in anticipation that the union will aim high and arbitrators will come down somewhere in the middle.

Hannemann's surprise split is of immense value to the union because it effectively raises the middle.

Mayoral spokesman Bill Brennan said the state's offer was "ridiculously low" in light of Hawai'i's robust economy and the budget surplus. He said the city's 4-percent offer is in line with the average 3.8-percent raises that employers in the private sector project paying this year.

However, some involved in the arbitration hearings understood city Budget Director Mary Pat Waterhouse to also commit to a step increase each year for HGEA members in addition to the general pay raise, which would nearly double the city's effective wage offer to 7.5 percent.

Brennan denied that anything specific was said about step increases, but he acknowledged that they're often included in contract settlements.

State negotiators were stunned when the city broke ranks without notice, having seen no sign of city discontent with the employers' offer or strategy at pre-arbitration meetings.

But Brennan insisted that the city was never clear on what the state's offer was going to be and there was never any firm agreement on strategy.

"The mayor doesn't like to play that lowball game," Brennan said. "That's insulting. The mayor likes to be realistic. We can afford 4 percent. He likes employees to know that he appreciates the work they do."

Which begs the question of why Hannemann made no apparent effort to voice concerns or try to persuade the state to his point of view before the case went to arbitration.

In that light, his sudden bail-out seems a lot like grandstanding intended to make himself look good to the politically powerful HGEA at the expense of the state and other counties.

Brennan said the city has a small surplus to pay the raises it offered and the money is provided for in Hannemann's budget to the City Council.

The thing is, though, the city has a surplus only because Hannemann has doggedly resisted returning to taxpayers most of the windfall the city has reaped from property tax assessments in the last three years. In some areas of O'ahu, those assessments have soared by more than 50 percent.

We'll see how homeowners who are averaging pay raises of only 3.8 percent in their own jobs will like paying higher taxes so city workers can enjoy raises twice as big as theirs.

David Shapiro, a veteran Hawai'i journalist, can be reached by e-mail at dave@volcanicash.net. Read his daily blog at blogs.honoluluadvertiser.com.