In spite of the city’s objections, a plan to reimburse Honolulu Police Department officers for the cost of purchasing uniforms, extra firearms and other on-the-job policing equipment was recently advanced by the City Council.
The plan, urged on by the State of Hawaii Organization of Police Officers, proposes a third-party contract with California-based CP Plus Inc. to implement a so-called accountable reimbursement plan.
If pursued, that action would see HPD establish a pretax spending account program, which officers could contribute to from their paycheck each pay period.
The withheld pay would be placed in a spending account and, upon making qualified purchases, HPD officers could then be reimbursed for the cost to pay for job-related expenses. Such costs are currently not reimbursed at HPD.
But the city administration rejects the idea.
It says the proposal, if pursued, would first require more city staffing, more information on how the program works, and that the program could pose more financial risk to the city and its employees.
But at the Council’s Sept. 4 meeting, the legislation pushing HPD’s reimbursement plan gained strong support.
Introduced by Council members Matt Weyer and Andria Tupola, Resolution 197 claims activating the plan could “attract and retain employees ” to HPD, which currently has over 400 staff vacancies.
“If the CP Plus Program or a similar accountable reimbursement plan is implemented, items such as union dues, continuing education, and the administration fee for enrolling in the program could be considered qualifying purchases, ” the resolution states.
The resolution also notes SHOPO has supported this program for the past five years.
Peter Luke, appearing on behalf of CP Plus, which represents SHOPO in this matter, said Resolution 197’s intent is toward the “out-of-pocket expenses that the police officers incur right now, in the course of doing their jobs.”
He said this program will save money for working HPD officers.
“This is their money, not the city’s money, not the taxpayer’s money, ” Luke said. “It’s their money, we’re saving them the taxes on it, that’s all. It will increase their net pay, and that’s important to realize.
“Unfortunately, tax law right now says that they cannot write off any of those expenses, ” he said. “The only way they can take advantage and save the taxes on that is if there is what’s called a reimbursable expense plan implemented through the payroll office.”
Luke stressed “the contract that we have is not with the city it is with SHOPO.”
“But it is, and does, need to go through the payroll system that the city has,” he said. “We are currently talking with Director (Andy) Kawano’s department, trying to answer some questions that he might have.”
Later, Weyer asked whether “conversations” were underway with the city Department of Budget and Fiscal Services, following a prior Council Committee on Budget meeting in August when the resolution was first reviewed.
“We have been in contact with Director Kawano’s office, we’re trying to set up a meeting, ” Luke replied. “He’s asked for some things that we’re willing to show him, and discuss with him.”
“We feel we have all the answers that he’s looking for, we just need to meet with him and his payroll office,” Luke added. “This is not a difficult thing to implement. We do this in the private sector now, we do this in the state, we are able to do this with teachers now.”
In response to Luke’s claims and under Council questioning, BFS Director Kawano said “currently, I’ve received two emails.”
Although he didn’t think “the concept was a bad one,” Kawano said his department wanted to better “understand what the obligations” of the city are in relation to this plan.
“What are administrative burdens that will be (needed to carry out) the program, and whether or not (the city) will be held harmless if there are tax issues … that have to be addressed with the IRS, ” he said. “That’s where we’re coming from, and we don’t have enough information at this time to recommend moving forward.”
Kawano said although CP Plus program was similar to the city’s existing flex spending program—in which users employ it for qualified medical expenses or child care expenses—where “the goal is to spend everything that you put into your account.”
“If you don’t spend it all, you lose it, that’s the city’s plan, ” he said.
However, Kawano noted as far as the proposed pretax spending account offered by CP Plus, “we’re not sure what happens with any remaining funds.”
“Is it forfeited? Or does the police officer keep the extra funds?” he said. “If they keep the extra funds, there’s a high probability that it’s taxable income at that time, that amount remaining; we want to understand that.”
“If that happens, there’s a high potential that not enough payroll tax would have been withheld,” he said. “So who’s going to be responsible to do all that work, to go back and reconcile, determine if payroll taxes are due, and file all the necessary” tax-related paperwork.
Moreover, Kawano said he wanted to see “a demo” of the program, and how “it would work with the city’s system.”
Meantime, most on the Council backed the resolution.
Ultimately, the Council—with members Esther Kia ‘aina dissenting and Calvin Say absent—adopted Resolution 197.
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