The Hawaii Legislature is done for the year. Its last day for this session was May 5th. It has done all its work on new laws for this season. Some of the bills it finally passed have already been signed into law. Others are awaiting the Governor’s action. Now the important deadlines are June 27, 2022, when the Governor needs to give notice of intent to veto a bill, and July 12, 2022, which is the deadline for the Governor to sign or veto any bills.
Some of the more consequential bills that now await the Governor’s action:
Senate Bill 514 proposes to give every resident a tax refund. The refund amount is $300 per exemption (which includes self, spouse, and dependents) or, for those households making $100,000 or more, $100 per exemption. To get the refund, a resident needs to file a 2021 income tax return on or before December 31, 2022. Many residents have already filed this return. If you are on extension, don’t delay too long! Also, the bill drops $300 million into the State‘s pension program and $500 million into the rainy day fund. We’ve previously covered this bill in a Frivolous Fable.
Senate Bill 3201 fundamentally changes the way tax-exempt organizations are treated under the GET Law. For a nonprofit to be taxable under federal standards, it has to be conducting a business unrelated to its tax-exempt mission. For a nonprofit to be taxable under the GET, it only needed to be raising money. This bill will adopt the federal standards for the GET, making it easier for nonprofits to keep track of the rules. We wrote that this bill would be a game-changer for nonprofits.
House Bill 2511 authorizes a $600 million cash infusion into our Department of Hawaiian Home Lands, To many of the Native Hawaiians who had been patiently waiting for Hawaiian homestead lands for years or decades – more than 28,700 are on the list now – this historic funding seems to be a welcome relief. We pointed out that DHHL experienced some inability to spend down the money it was given; specifically federal funds. As we wrote earlier, we hope that DHHL can put that questionable past behind and do some good for the Native Hawaiians who benefit from the Hawaiian Homes Commission Act of 1920.
Senate Bill 3289 establishes the Hawaii Retirement Savings Program, a concept heavily pushed by AARP this year. The idea is for the State to establish a program that private sector companies and employees can opt into. For small employers that have to pay oodles of money to keep their own employee retirement plan going, it would be a chance for them to ditch their current plan and adopt the State plan, or for small employers who had given up on retirement plans for their workers because of the associated costs, it would be a chance for them to offer retirement plan benefits once again.
Senate Bill 2475 gives an exemption from the GET for stevedoring services, as well as wharfage and demurrage fees that are paid to the Department of Transportation. These fees are unique to the industry of transporting goods by sea. Some time ago, we noted that the federal government came out with an executive order against detention and demurrage charges, and argued that we really shouldn’t be taxing transportation of goods when we depend on that transportation for our very existence. This bill, by knocking the GET off these fees, should be a step toward lowering our stratospheric cost of living. It also promotes more equality between water and air transportation of goods because federal law prevents us from applying our GET to air transportation.
We’ll be covering more of these bills in articles to come.
The COVID-19 pandemic made history both here and abroad, but for different reasons. Here, it was remembered not only for the 1,400 lives it claimed, but also for the businesses it hurt or ruined. Our experience was similar to other States across the country, and our federal government stepped in to give us some economic assistance that, we hoped, would blunt the impact of stay-at-home orders and forced business closures.
That economic assistance came in the form of some very different federal programs.
Everyone got a couple of rounds of stimulus checks. The Feds and we said it’s not income and we won’t tax it. No income tax, no GET.
The unemployed got some extra unemployment compensation. The Feds didn’t tax it, up to $10,000 in 2020. We did. We made people pay income tax, but not GET.
Then came the forgivable loans: PPP (Paycheck Protection Program) and EIDL (Economic Injury Disaster Loan) is what they were called. They initially were loans to affected businesses, but the businesses obtained forgiveness of all or a part of the loans, meaning that the businesses could keep the money. For tax purposes, loans you get aren’t income because you need to pay the money back. But when the debt is forgiven, the amount of forgiven debt is income. The Congress said that PPP forgiveness doesn’t count as income but EIDL forgiveness does. So, we said that for income tax purposes we would do the same thing.
And then, for GET we said (in Tax Information Release 2020-06): “The general rule is that amounts received by a business that replace income are subject to GET. Thus, grants or other payments that replace or supplement income are normally subject to GET. However, in light of the severity of the economic impact of the COVID-19 pandemic, GET will not be imposed on payments received under PUA, loan amounts forgiven under PPP, and EIDL Grants. These amounts will be treated as exclusions from gross receipts and should not be reported on GET returns.”
Usually, “severity of the economic impact” is not a legitimate reason why laws that apply to other people or in other situations independently of economic consequence don’t apply here. If our lawmakers pass laws that modify the rules, that’s fine. Or if they pass laws that say that the agency can consider economic impact, perhaps among other things, and grant relief from this or that legal requirement, that’s fine too. Or the Governor could come in and suspend the laws because of the emergency, which he had been doing on a regular basis with emergency proclamations. But no laws were passed modifying the rules or granting the Department of Taxation the authority to bend the laws, and the Governor’s proclamations didn’t suspend the tax code (except to shut off the flow of TAT money to the counties).
Now, we have restaurants and bars getting grants from the Restaurant Revitalization Fund (RRF). And we have entertainment venues getting grants under the Shuttered Venue Operators Grant (SVOG) program. The Department of Taxation has yet to officially tell us whether the GET will take a bite out of these grants, although Department staff have informally said that they would be taxable because of the “general rule” quoted above.
But what about severity of the economic impact? Does that count anymore? Restaurants and bars getting RRF money, or entertainment venues getting SVOG dollars, need to show pandemic-related revenue loss before the Feds will give them money. Does that matter at all?
What say you, Department of Taxation? To GET or not to GET, that is the question today.
It looks like we could be on the verge of a new tourism policy for Hawaii.
Legislators have been dickering this past week over how much money the state tourism agency should receive and under what conditions. Ultimately, however, the state Hawaii Tourism Authority might receive no funding at all.
Which would be ideal.
As Allison Schaefers reported yesterday in the Honolulu Star-Advertiser, Hawaii legislators strongly disagreed over two bills that would fund the HTA.
One group disliked the micromanaging that HB1785 would impose on the HTA, while other lawmakers opposed the creation of a new special fund and commission that were central to SB775.
Both bills passed each chamber, but neither actually made it to a conference committee hearing. As of today, HB1785 is dead, while SB775 can still be revived if the Senate agrees to the House’s amendments by May 5.
With no appropriation, the fate of the HTA is uncertain. The House and Senate have effectively defunded the HTA by leaving it out of the final version of this year’s budget bill.
If this turns out to be the final statement on the HTA’s future, no tax dollars will be spent on destination management or advertising, and the industry will be on its own. Instead of propping up an agency that either micromanages tourism or uses tax dollars to promote it, the state government will be out of the tourism business altogether.
To be clear, defunding the HTA should not be misconstrued as opposition to tourism. Rather, it is a philosophical statement about the state’s practice of supporting and promoting — and increasingly “managing” — one specific commercial enterprise over others.
No matter how important tourism might be to our economy, it is not the state’s job to be favoring specific companies or business sectors. Moreover, the tourism industry, especially, is quite capable of paying its own bills, and has been for a very long time.
Just last month, U.S. visitor arrivals to Hawaii came roaring back after two years of coronavirus lockdowns, and the tourist numbers are sure to go higher once visitors from Japan are back in the mix.
Of course, given the statements made to the Star-Advertiser by tourism officials about the importance of the HTA, the Legislature might not be finished with state-funded tourism. However, if funding is restored, that would present us with the irony of the state promoting visitor arrivals even as the counties attempt to limit or “manage” them.
Whatever the Legislature decides, Hawaii’s contradictory approach to tourism is not viable in the long-term.
As my colleague Joe Kent, Grassroot Institute of Hawaii executive vice president, said yesterday in the Honolulu Star-Advertiser, the Legislature has been asking the wrong questions about the HTA’s future.
“The real question,” he said, “is whether the HTA should be funded at all, since it would save tax dollars and foster economic sustainability to let the tourism industry pay for its own advertising and management.” ___________
Keli’i Akina is president and CEO of the Grassroot Institute of Hawaii.
Written by Richard Balzano, CEO of the Dredging Contractors of America, the article sought to defend the 1920 federal maritime law against the increasing number of voices calling for its reform
However, without its subtitle, “Support the pro-American Jones Act,” the headline could have just as easily been suggesting the need for Jones Act reform.
That’s because the Jones Act actually undermines U.S. industry and jobs. Its alleged purpose was to bolster America’s domestic maritime fleet and ensure national security. But with only 94 large oceangoing Jones Act-qualified ships left — down from 257 in 1980 — it is pretty clear the law has failed.
To put that in perspective, there are more than 54,000 large oceangoing merchant vessels worldwide, leaving the U.S. with less than 1% of the international market share.
U.S. shipyards capable of building oceangoing commercial ships, meanwhile, had declined to a mere four as of 2021, during which they did not deliver a single Jones Act ship.
Commercial shipyard jobs have been steadily declining as well, from 180,000 in 1980 to 94,000 in 2018 — and few of those 94,000 jobs are at those four yards.
Not only that, three of the remaining four large commercial shipyards are largely foreign-owned. Plus, much of the design and technology used in the construction of Jones Act vessels comes from foreign sources.
Further, U.S. shipyards are so expensive that most Jones Act carrier companies send their vessels to foreign shipyards, such as in China, for repair and maintenance. Even a 50% U.S. tariff on using foreign shipyards isn’t enough to discourage the practice.
Pasha Hawaii, for example, is currently retrofitting its 42-year-old Horizon Reliance containership at a Chinese shipyard to run on LNG. Similarly, Matson announced this month that it will be sending its Daniel K. Inouye — the largest containership ever built in the U.S. when it was completed in 2018 — to a Chinese shipyard next year, also to have it converted to LNG propulsion.
Nevertheless, in Balzano’s view, the Jones Act is vital to America’s economic, national and energy security.
“The Russian invasion of Ukraine is teaching us about energy independence,” Balzano wrote. “We must as a nation be able to supply our own energy and transport it around the nations when and where it is needed.”
Balzano is correct that the Russia-Ukraine conflict has highlighted America’s energy situation. But he misses the boat when he declares that the Jones Act “protects our critical maritime infrastructure and workforce to ensure the movement of energy, agriculture and other critical commodities.”
For example, even though the United States is the world’s top natural gas producer, there are zero Jones Act tankers capable of carrying the fuel between U.S. ports. That’s because these ships cost an estimated two to three times more to build in U.S. shipyards than overseas. As a result, Puerto Rico cannot access cheap liquefied natural gas from Texas and Louisiana. Instead, it imports all of its LNG from abroad — sometimes from Russia.
At the opposite end of the country, Hawaii has become almost wholly dependent on foreign fuel imports, in large degree because of the Jones Act. In normal years, for example, the Aloha State buys a quarter to a third of its crude oil from Russia. Most of the rest comes from Libya, Angola and other countries that also don’t necessarily align with U.S. interests.
The high price of building and operating a Jones Act tanker means it’s more attractive for Hawaii’s only refinery, Par Hawaii, to source oil from abroad. Thus, U.S. dollars and jobs flow abroad, and U.S. states and territories end up dependent on geopolitical rivals such as Russia.
The sad truth is that while a small and shrinking subset of the U.S. economy has been reaping the benefits from the Jones Act, American consumers — especially in areas dependent on ocean transportation — have been paying the price.
Businesses have suffered too. Farmers and agricultural interests have long complained about the Jones Act, and it has been causing headaches for the U.S. offshore wind industry all across the country.
Balzano also mentioned that the law supports 650,000 U.S. jobs overall, a number that independent researchers are unable to substantiate, and which has mysteriously ballooned in recent years, even as America’s maritime industry has declined; in 2014, the Jones Act lobby said the total was 500,000.
In any case, no matter how many jobs the domestic maritime industry actually supports, the Jones Act has nothing to do with it, and those jobs would not disappear if the law were reformed. To the contrary, reform would likely lead to more maritime jobs, since that would allow for greater shipping competition and more work at American ports.
Balzano concluded that U.S. policymakers should, “Stand up for American jobs, American-made products and America’s security.”
Yes, and the best way to do that would be to reform the Jones Act. _____________
Jonathan Helton is a research associate with the Grassroot Institute of Hawaii. For more articles about the Jones Act, go here.
I hate to be the bearer of bad news, but banning short-term vacation rentals is not going to lower Oahu housing prices.
On Wednesday, the Honolulu City Council passed Bill 41 by a vote of 8 to 1. The bill would allow short-term rentals only in certain resort areas and require that rentals in residential areas be for at least 90 days.
The bill claims that, “Short-term rentals are disruptive to the character and fabric of our residential neighborhoods” and that they “increase the price of housing for Oahu’s resident population by removing housing stock from the for-sale and long-term rental markets.”
The bill’s purpose, therefore, is to “better protect the City’s residential neighborhoods and housing stock.”
Those are admirable goals, but as I’ve said many times, good intentions don’t necessarily make good policy.
To the point about short-term rentals being “disruptive,” this is a reference to issues such as parking and noise.
But the fact is, there already are city ordinances that deal with such concerns, and in an ideal situation, both short-term rental owners and their aggrieved neighbors would come together to find ways to make sure they are enforced.
As for the claim about “removing housing stock” from our neighborhoods, this is where the bill really goes astray. I think it is important to focus on the fact that a ban on short-term vacation rentals will do nothing to address Oahu’s — or Hawaii’s — housing crisis, but rather will cause grave economic harm to many Hawaii residents.
Photo by Charley Myers
For example, during an episode of “Hawaii Together” on ThinkTech Hawaii earlier this year, I interviewed owners of vacation rentals who spoke about how this bill would make it impossible for them to afford their homes and could force them to leave Hawaii.
Meanwhile, I find it suspicious that heavy support for Bill 41 came from the tourism industry, whose fortunes were slammed over the past two years by the loss of visitors due to the coronavirus lockdowns.
Industry leaders touted the concerns about the effect of vacation rentals on neighborhoods and housing costs. But given that they were supporting regulation to eliminate their competition, it’s troubling that such arguments were taken at face value, especially when there is little evidence to back them up.
Research on how vacation rental bans affect housing costs is nebulous at best. There are nationwide studies suggesting that vacation rentals may drive up costs, but there are also studies like the one done by Santa Barbara City and County.
In 2016, Santa Barbara was considering a ban similar to the one just passed in Honolulu, but found that the impact of short-term rentals on the long-term housing supply was “negligible, far less than presumed.”
But we don’t have to depend on mainland studies. We can look at our own experience.
Though owners of vacation rentals often explain that their homes would not qualify as “affordable” housing or long-term rentals, Kauai, Maui and the Big Island have all enacted some type of ban on vacation rentals. Oahu tightened the screws in 2019. Yet, housing prices still went up. Even when vacation rental usage declined during the lockdowns, it didn’t result in a significant drop in housing costs.
The sad reality is that, once again, Hawaii policymakers are falling for easy answers. How nice it would be if something quick and simple like an “empty homes” tax or a vacation rental ban could solve the housing crisis.
But those aren’t real answers. What we need are policies that will encourage homebuilding.
As I mentioned in my column last week, “UHERO is my new housing policy hero,” we know that one of the biggest reasons for Hawaii’s high cost of housing is its regulatory barriers to homebuilding. The counties have played a large part in creating those barriers. Now, they need to start the tough work of dismantling them.
Instead of a ban on vacation rentals, which is not going to bring down the cost of housing in our state, our lawmakers should be spending their time enacting policies that have been shown to work, like the Tokyo Model of “light touch” density.
Hawaii’s housing crisis is the result of decades of misguided policy, and it could take nearly as long to fix. That is why we must work together now to identify and implement tried-and-true strategies that will provide us with the affordable housing we so desperately need. ___________
Keli’i Akina is president and CEO of the Grassroot Institute of Hawaii.
Here at the Tax Foundation of Hawaii, we try to follow and report on bills proposing new taxes. We try like heck to pick up any bill that mentions taxes, or affects the tax codes. But that’s not enough. Lawmakers can be very crafty and propose things that don’t look like taxes, and they sometimes fool the Hawaii State Tax Watch Doggie’s nose. Here are some examples of recent stealth tax bills.
House Bill 2399, for example, establishes an “Extended Producer Responsibility Program” that is designed to slap a “fee” on anyone who imports or sells “fast-moving consumer goods,” which means anything non-durable like food or drink. The fee in the current draft of the bill is $150 for each metric ton of packaging material placed in the market. The Department of Health is tasked with administering the program.
As currently drafted, the fee could apply multiple times in the economic chain. If Supplier A, for example, sells paper plates to Plate Lunch Truck B who sells plate lunches on the plates, then both A and B would be liable for the fee.
Worse, the bill as drafted is designed to make the law hard to find. The bill as drafted is a “temporary” measure designed to sunset on June 30, 2028, and as such the law, if passed, won’t even be put in the Hawaii Revised Statutes. Those who don’t already know about this law would be unlikely to find it…until it’s too late.
Some of the trade associations of affected producers testified that the Legislature established a Plastic Source Reduction Work Group in 2020, and that work group extensively debated the issues and concluded that a more careful study of producer responsibility was needed. This bill, however, basically tells that group, “To heck with that study. We are going to impose the tax now.”
This bill is still alive and will be debated by a House-Senate conference committee.
Senate Bill 3040, sponsored by our Department of Accounting and General Services, deals with state procurement, namely where the State buys goods and services from other businesses. The bill directs the state procurement administrator to procure and administer automated procurement systems, and then collect a transaction fee from all vendors using those systems.
The bill doesn’t tell us how much the fee is going to be. Rather, it gives the State Procurement Office the authority to set the fee to cover procurement automation system costs. The Procurement Office in its testimony estimated that those costs would be $5 million to set up the system and thereafter $500,000 to $1 million per year in maintenance and licensing fees.
The bill does not make it mandatory for any vendor to use the system – but we think that’s the logical next step.
This bill is also set to go to a House-Senate conference.
Last year, the Department of Land and Natural Resources was pushing Senate Bill 1173, an “Ocean Stewardship User Fee,” which would have extracted an extra dollar from each passenger or customer using or riding on commercial vessels water craft, or water sports equipment. The moneys in the fund were to be used for marine resource conservation, marine resource impact mitigation measures, and replacing mooring buoys and other infrastructure. Oh, and 20% of it would go to the Office of Hawaiian Affairs as ceded land revenues.
Interestingly, the bill also contained a provision saying that the fee wouldn’t count as a gross receipt for commercial vessel operators who need to pay the State a monthly fee based on gross receipts.
That bill was proposed in 2021 and carried over to the current legislative session. However, that bill never made it out of House Finance Committee.
Taxes come in many sizes and shapes. Can you find them all?
Hawaii has a record-high state budget surplus this year of $4 billion, and here are some of the ways our legislators currently are planning to spend it:
>> $250 million on tax rebates of $300 for each taxpayer who earns less than $100,000, and $300 for each of their dependents, and of $100 for each taxpayer who earns more than $100,000, and the same per dependent.
>> $350 million to $400 million toward construction of a new Aloha Stadium.
>> $185 million extra for debt service.
>> $350 million for public pensions.
>> $350 million for public employee health benefits.
Photo by Charley Myers
>> $600 million for the state Department of Hawaiian Home Lands.
>> $100 million for the prevention of disease outbreak.
>> $174 million for the University of Hawaii and the state’s community colleges.
Some of those spending plans are encouraging, but some are not. Is there any doubt, for example, that the Aloha Stadium project will be among Hawaii’s future white-elephant boondoggles?
And, sure, it’s great that they are putting money toward the state’s massive debts and unfunded liabilities. But some of those debt payments could actually be for anticipated increases in the pension debt from upcoming public employee salary hikes.
For example, legislators could be aiming to increase public teacher salaries by between $7,700 and $26,000 per year, but that would increase the state’s pension debt by $376 million, according to Thomas Williams, executive director of the state Employees’ Retirement System (see here, page 8).
Most other public unions are still in negotiations for salary increases, some of which may be overdue but would, if authorized, nonetheless increase the liabilities of the state’s benefits systems.
Will our legislators use the record-high budget surplus to pay down the state’s record-high debts? Or will their spending plans end up adding to them? We will update the numbers once the budget finally emerges from behind closed doors.
To see more about where the money might be going, check this out. __________
Joe Kent is executive vice president of the Grassroot Institute of Hawaii.
Many of the most draconian measures of Hawaii’s coronavirus lockdown measures have been lifted, but it still is important that we reform the state’s emergency-management law, according to Sandy Ma, executive director of Common Cause Hawaii, and Malia Blom Hill, policy director for the Grassroot Institute of Hawaii.
Ma and Hill were the guests earlier this month on Keli’i Akina’s “Hawaii Together” program on Think Tech Hawaii. The topic was “Reining in the state’s emergency powers.”
“I know that it may seem like it’s not as pressing [to rein in the governor’s emergency powers],” said Hill. “But I will just remind you that the nature of the emergency powers are such that you can be right back in it — like that — just at the say-so of the governor, which means that it’s still an important issue; it still needs to be addressed.”
Hill said the most notable problem is “the vagueness about what happens once the initial emergency ends.”
Current law, she said, “says an emergency can last for 60 days — because these are pretty remarkable powers that are being given to the executive, things that are, you know, almost legislative in nature, [such as] the ability to basically change the law for a temporary time.”
But after the emergency period ends, then what?
“The statute says it terminates after 60 days, and then it says nothing else. So that’s where, over the last two years, we’ve seen a lot of frustration. Because what has happened in real life, in practice, is that the governor and the mayors have just kept extending the emergency through additional proclamations.
“And, you know, 60 days is one thing. Two years is another. That is a very long time for an executive to have powers that go far beyond what we really assign to the executive constitutionally.”
Ma, said it also is important that our government remain transparent and accountable during states of emergency, because that is how we are able to “keep tabs on government.” Yet, she said, the governor suspended both the state’s open-meetings and open-records laws for well over a year.
“So while government was functioning, no one knew what government actions were taking place. So that was incredibly troublesome for the public.”
Ma said emergency or not, “We should always be watchful of our government. Always.”
To view the entire half-hour conversation, click on the video below. A complete transcript is provided.
4-11-22, Sandy Ma and Malia Blom Hill with Keli’i Akina on “Hawaii Together.”
Keli’i Akina: Aloha, everyone. Welcome to “Hawaii Together” on the ThinkTech Hawaii broadcast network. I’m Keli’i Akina, your host and president of the Grassroot Institute of Hawaii.
We’re down to the final weeks of the 2022 legislative session. and I’m very pleased to see that there’s a bill to limit the governor’s emergency power. It’s making its way near the finish line. We hope it crosses. Now that bodes well for transparency and for accountability here in Hawaii, as limiting executive power during emergencies is an essential part of good governance.
The bill we’re looking at is SB3089, and it would specify limits to the governor’s emergency powers and help protect the state’s traditional constitutional balance of powers.
To discuss this matter today, I’m so delighted to have with us two individuals who understand the issues very well. They’ve been working on this bill and they’ve been communicating to the public what we need to be looking at.
Sandy Ma is the executive director of Common Cause Hawaii and Malia Blom Hill is the policy director of the Grassroot Institute of Hawaii. Just so glad to continue working with both of these individuals.
Sandy, welcome to the program. Thank you so much for being here.
Sandy Ma: Thank you for having us.
Akina: Good to have you back. I love to collaborate with your organization. Could you tell us at the start, just a little bit about your background and what led you to work with Common Cause Hawaii?
Ma: Yes, of course. My name is Sandy Ma, and I’m the executive director of Common Cause Hawaii. Common Cause is a national nonprofit dedicated to holding power accountable. Our purpose is to make sure that people can engage with government and know how our government functions, and to ensure that our government is transparent and responsive to the people.
I grew up on the East Coast, went to undergrad and then to law school. I started off in the nonprofit sector on the East Coast, and then moved to Hawaii and practiced in the nonprofit sector here in Hawaii. Then moved over and did some private practice law firm jobs, moved over to government. And when this opportunity came up with Common Cause to be the executive director here, to participate in making our Hawaii government more accountable to the public, I jumped on this opportunity. And it has been a great ride for me here in Hawaii and in making sure that the people know how to engage in government.
So that’s how I became the executive director of Common Cause Hawaii, and I very much enjoy working with other nonprofit organizations such as the Grassroot Institute of Hawaii. So thank you very much.
Akina: Thank you, Sandy. And we also enjoy working with you. Appreciate so much what you and Common Cause are doing.
We also welcome to the program today someone who will be familiar to anyone who has been following the Grassroot Institute for the last decade or so, and that’s Malia Blom Hill.
Malia is from Hawaii. She started with us here, and thanks to the magic and wonder of telecommunications, she remains on the staff of the Grassroot Institute of Hawaii, although she lives and frequently represents us in Washington, D.C.
Malia, aloha and welcome to the program. Tell us a little bit about your background.
Malia Blom Hill: Oh, of course. Well, my family, my heart, is in Hawaii, but I also went to law school on the East Coast, and after some work in that general area, I came to Grassroot Institute, first to work on transparency, of all things; they had a very large transparency project.
Then over time I got more involved in the policy side, including transparency still, accountability, a lot of the free market work that Grassroot Institute does. But I’ve been very interested in the issues related to civil liberties.
I’m the author of the “Lockdowns Versus Liberty” report that we did last year, looking at the issue of the emergency powers and Hawaii’s emergency-management law. And that’s become a real strong interest of mine, as we’ve watched what’s happened over the coronavirus pandemic.
Akina: Thank you, and thank you for your work at Grassroot. I’m going to start off by directing a question to you, Malia. You did author “Lockdowns Versus Liberty,” which is available at the Grassroot Institute website. What have you learned about the emergency powers and the emergency management law? How would you explain what this body of law is?
Hill: You know, it’s interesting, because it’s the kind of law that everyone, sort of, you figure, it must exist. It’s the statute that governs exactly how the governor can act in an emergency. And until about two years ago, we thought about it as what to do if there’s a hurricane or some sort of act of God, perhaps a war or military kind of emergency. We didn’t think about it in terms of a healthcare emergency.
And that’s what has really exposed the problems in it, because what the statute does is it just gives the governor power to suspend laws, as needed, to act very quickly and decisively to deal with an emergency situation. However, because it was never created with this sort of vision of an ongoing multi-year health emergency, it has real limitations.
Most notably is the vagueness about what happens once the initial emergency ends. The emergency-managementstatute says that an emergency can last for 60 days, because these are pretty remarkable powers that are being given to the executive, things that are, you know, almost legislative in nature — you know, the ability to basically change the law for a temporary time.
So after the emergency period ends, what happens? Well, the statute says it terminates after 60 days, and then it says nothing else. So that’s where, over the last two years, we’ve seen a lot of frustration. Because what has happened in real life, in practice, is that the governor and the mayors have just kept extending the emergency through additional proclamations.
And you know, 60 days is one thing. Two years is another. And that is a very long time for an executive to have powers that go far beyond what we really assign to the executive constitutionally.
So, it’s a necessary statute, and I don’t want to create this idea that we have some sort of problem with it, or that we don’t understand that there needs to be a way to deal with emergencies. But one can do so without upsetting the constitutional balance of powers.
So when we talk about reforming the statute, what we’re really talking about is restoring the balance of powers and making sure that constitutional rights are protected under it.
Akina: Thank you. Sandy, you’re particularly interested and concerned about the transparency aspects of the emergency powers laws and how they may need to be reformed. What are your thoughts on that?
Ma: You’re absolutely correct there. There were two suspensions of laws under Gov [David] Ige’s use of the emergency powers act that we were particularly concerned with. Governor Ige suspended the sunshine law and the public records request act, and he suspended it for a really long time — for well over a year.
This caused great concern amongst good government groups because that affected how we were able to keep tabs on our government. It affected transparency and accountability.
So there’s concerns with the indefinite and prolonged and widespread suspension of our public records act and our sunshine law. Government meetings were still going on, but we were not able to have any guidelines for how the public were able to attend these public meetings. We are particularly concerned with suspensions in the sunshine law, because government meetings were still occurring, even though the sunshine law was suspended.
There were no guidelines in place for how the public could attend these meetings, what decisions were made at these government meetings, how the public could submit testimony, could comment. And so, that was particularly troublesome to Common Cause and other good government groups.
Another law that was suspended was our state public records request. Especially in COVID times, when we didn’t know how many cases there were, what steps were being taken by government to address the COVID situation, news agencies could not file public records requests to actually find out this information.
So while government was functioning, no one knew what government actions were taking place. So that was incredibly troublesome for the public.
These laws were suspended up until last year for the public records requests, and the suspension of the sunshine law was just recently lifted.
So these are all things that the public needs to know about, has a right to know about, and we cannot hold our powers accountable without this.
Akina: Sandy, I appreciate that. Understanding these two laws that got suspended. I think some people might ask the question “What is the big deal?” however. What harm does it bring to limit the sunshine law or public records access for a short period of time?
I’d be interested in either of your thoughts on that, as well as whether this reflected a national trend, or whether we were actually an outlier in our practice of suspending sunshine and open-records laws. Any further thoughts on that, Sandy? And then Malia.
Ma: That’s a great question. Other states did suspend their sunshine law and their public records requests, but we had the most egregious suspension of both. Ours was suspended for the longest period of time and was the most broad suspension.
So if we go back and look at states that suspended the sunshine law and the public records requests across the nation, we had the broadest and the longest suspension across the nation. We were an outlier in that sense.
And why it’s important? It’s important because we can’t keep tabs on our government. We can’t keep tabs on what our government officials are doing, what our elected officials are doing, what our public servants are doing.
That’s what we’re here for. That’s what the public is supposed to do, is to keep tabs on our government.
Akina: Malia, ostensibly, there must have been some purpose behind the suspension of sunshine law and open-records laws. Our government must have been trying to accomplish something. What was it they were accomplishing? What do we know about their thinking on this?
Hill: Well, if I were to be kind — which I will be for very, very briefly [laughs] — it could be that in the early days of COVID, no one really knew what they were dealing with. So there was this idea of, you know, “No one’s going to be there to deal with it,” or “It’s too dangerous for everyone to be in a room together. We’re just going to …” — and not every state did this but we did — “… we’ll just stop everything and then figure it out from there.”
But that is the problem. And now, to be unkind, there was no need ever to suspend the open-records laws. Our open-records law already envisions the possibility of some need for a delay like this, so that was completely unnecessary.
As for the sunshine laws, yes, the issue of having everyone in one room together was a real concern for a while. However, there’s two issues there.
I’m actually going to steal from — I noticed Sandy’s commentaries or something like that. I remember during this, well — she pointed out that Zoom is not the same. And I recognize the irony of saying that [laughs], but Zoom is not the same. Not everyone has access. These open-meetings laws exist so that the public has access, so that we can see, so that we can participate. And that really got shut down.
Then it has another layer of, you know, who can participate, because making it virtual and keeping it virtual for so long, locks people out of it.
And, I’m going to be honest. I think it makes it a little easier for the government to keep everyone at this virtual distance — even when it was no longer strictly necessary for health — because it’s just easier to dismiss people, it’s easier to control the situation when you’re doing it all virtually. You don’t have that messiness of having to deal with the public in person. But the public is entitled to be part of that. We need to be able to watch it. We need to be able to see how these decisions are made.
And it’s ironic that you see so many complaints about “People didn’t trust us” and “People kept questioning how we were handling it.” Well, this is why. Because you shut down transparency. Because you were so slow to reopen it. It actually makes the problem worse.
Akina: Were there any requests for information made by Common Cause or Grassroot Institute or other organizations or the media that were frustrated during this period of time because the government wasn’t able or willing to comply?
Ma: Well, Common Cause did not make any requests of government during that time. But I have heard of media agencies making requests of government health organizations for COVID numbers and COVID statistics that were frustrated due to the suspension of the public records act.
Hill: Yeah, Grassroot did a request about the deliberations for COVID. The Associated Press made a similar request, and it was first pushed off under the excuse that they didn’t have to deal with it because the governor had suspended [the act].
Then when they did finally respond to us, they said it would cost several hundred thousand dollars — which is its own problem, and possibly the topic of a different episode — but it did definitely affect the open-records request that we made.
Akina: One of the things that the public sees going on when records requests are denied, especially for statistics that may deal with the pandemic and so forth, is that it looks like the government is hiding something.
The government may or may not be hiding something, but if the public is not given access, and the media is not given access to relevant statistics and so forth, it’s very difficult for government to build trust.
Did you sense that going on out there, when these requests weren’t complied with?
Hill: Definitely. We are in a position where we are going to hear a lot of those kinds of complaints. And I think that almost everyone saw — especially in the early months or the first year or so of the pandemic — everyone saw the sort of slow dissolving of public trust, this draining away of the belief that they were being heard and responded to, and the fact that you couldn’t get information requests, that they would be delayed.
Even if you were making a request to something completely unrelated to — not the Department of Health or the governor’s office, but, say, HART [Honolulu Authority for Rapid Transportation] — it might take a little longer because, because it could, because they had been given this sort of blank check to just take longer to deal with your open records requests.
Akina: There were other — Yes, go ahead, Sandy, please.
Ma: I think people were just so frustrated with everything that was going on, and the economy, and just being told to stay at home, that there was just a lot of frustration building. And building. And building.
So I think it just led to a lot of anger towards government in some sense. And If you don’t have transparency with government, then it just leads to a lot of distrust and anger towards government.
Akina: Malia, when we opened the program, you referred to some other aspects of the emergency laws that need to be reformed. Could you mention a few of them? And, in particular, the need to provide some kind of check and balance by the Legislature on the governor’s or the mayor’s own powers.
Hill: Everyone has something that they remember from the COVID restrictions that they in particular just thought made no sense. Maybe it was a rule about who you could go to dinner with, or how many people, or how far apart, or could you walk on the street, or could you walk at the beach. Everyone has at least one example of something that just seemed arbitrary and irrational and frustrating.
Part of that frustration — as Sandy noted — is the inability to really bring it to anyone to do anything with it. There’s no petition, there’s no voice.
That’s one of the problems with the way that the emergency-management statute is structured. Because it can’t envision something that would go on longer than 60 days, it puts an enormous amount of power in the hands of the governor and the mayor to suspend laws, to create new penalties.
One of the things that has since been addressed, but was a problem, was that there was no real idea of what was going to happen when you violated a COVID order, even if it’s just, you know, “Are you wearing a mask while filling your gas tank?” kind of violation.
And for a while, everyone was racking up misdemeanors, because that’s how unprepared we were to deal with this. And yet, the only say, the only word was the governor’s.
Usually, when you get new law, when you have a change in the law, that goes through the Legislature. It has a process. People have a way of having a voice in what happens. They can weigh in. And what happens under the emergency-management statute is that that’s just gone.
The legislative check on the executive power is just gone. It’s supposed to be temporary. But, as we’ve seen, it isn’t functioning as temporary.
And that’s the real problem here, is that we have a statute that we have now, through experience, learned it puts too much power in the hands of the executive without balancing it.
It’s not to suggest that it’s going to just be this miracle thing, where no executive will ever come up with an emergency proclamation that you won’t like.
The issue is: Is there a way? Is there a balance? Is there a place for the people’s voice to come through? And that’s why it needs reform. We need some sort of legislative voice, some legislative check on what the governor or the mayor can do.
Akina: Sandy, did you want to add anything to that?
Ma: No. I think that was a great summary by Malia as to why the people’s voice is so important in this process. Because the governor issued over two dozen, I believe, emergency proclamations for COVID.
Akina: Yes.
Ma: So while we understand the importance of the emergency powers act and the need during these COVID times, we do also want to balance that with transparency and accountability, and the public’s right to participate and to engage in government, even during COVID times.
Akina: The declarations of emergency that the governor issued were supposed to expire after a certain number of days. And as you mentioned, Sandy, we had at least a couple of dozen of these decrees, which appeared to extend the practices of any one emergency decree.
Malia, your thoughts on that? I know you’ve looked into that. What was going on here, and what needs to be reformed about that?
Hill: Well, this has been the topic of some legal debate, because the statute is silent on what happens after an emergency terminates. It says that an emergency terminates automatically after 60 days. And then it says nothing.
Now, one could argue — and I think we have, I guess, in the past webinars — that implicitly means, then you can’t do anymore, because that’s it, that’s the end of the emergency. Because otherwise, they could have done something to signify something else.
But what has happened is that the governor has issued successive proclamations extending the emergency, and, to date, no one has successfully challenged that in court.
So what we have is this sor of open-ended ability to just declare emergencies until the end of time, essentially, because we haven’t really seen any mechanism to prevent that.
That’s the reform that is needed the most, is basically the ability to stop an emergency, take it outside of the governor. In this case, we want the legislature to be able to step in and declare an end to an emergency.
Akina: Thank you. One of the problems that we had with the successive pronouncement of emergency decrees is that it was hard to tell what the emergency was, and what constituted the beginning and the ending of an emergency.
Who is it that should determine when we are in a state of emergency that requires the invoking of the emergency powers act?
Hill: It says in the statute that the governor is the sole decision-maker on that. It also says in the statute that an emergency is basically what the governor says it is.
That’s another sort of gray area. You can see why it would be necessary to have some flexibility there, because, by the nature of it, you don’t really know what an emergency could be.
But there’s also a reason to worry because at what point is there sufficient risk to health and safety that you should be able to give these rather significant powers to the executive?
Which, again, makes it very important to be able to end an emergency because you need to be able to have somebody else, the Legislature, be able to step in and say, “No, this is not an emergency. It does not warrant this use of short-term power. So we’re just going to terminate this emergency.”
Again, it just keeps coming back to you. You need these powers, but you need to be able to balance them.
Akina: Sandy, you’ve been tracking SB3089, and there’s a likelihood of it passing. There’s a likelihood of changes being made in conference committee. We’ve only got a minute or two left. Any thoughts about this?
Ma: Our organization’s main concern is to ensure that there is some transparency and accountability through sunshine law and public records requests that’s left in the bill. That the public can have sunshine law and public records requests, that that’s not stripped from the oversight of the Legislature.
Akina: Thank you. Malia, what would you like to see changed in SB3089, or added or deleted?
Hill: Well, I have to agree with Sandy. They keep putting in and taking out these protections for open records and sunshine law, and I want those open-records protections back in. I think it just came out in the last one.
I’d also like to see a mechanism where the governor basically needed approval before extending to the third and fourth and fifth emergency. That’s the other change I’d like to see.
Akina: Well, it looks like the most draconian measures have been lifted. Most things that people dislike about the emergency powers requirements, whether it be masks or vaccine certification and so forth, have been lifted.
Just a final thought, is this a time to relax? Or are there things about which we need to be vigilant? As a final word from each of you. We’ll start with Malia.
Hill: I know that it may seem like it’s not as pressing, but I will just remind you that the nature of the emergency powers are such that you can be right back in it — like that — just at the say-so of the governor, which means that it’s still an important issue; it still needs to be addressed.
Akina: Sandy?
Ma: We should always be watchful of our government. Always. [laughs]
Akina: Great note to end on. Thank you so much for being with us today, Sandy Ma, executive director of Common Cause, and Malia Blom Hill, policy director for Grassroot Institute of Hawaii.
Thank you everyone for joining us. I just want to say “mahalo” from all of us at Grassroot Institute for your vigilance in staying alert and aware of what’s going on in public policy in our state.
Until next time, I’m Keli’i Akina. We are on the ThinkTech Hawaii broadcast network. This is “Hawaii Together.” Aloha.Until next time, I’m Keli’i Akina. We are on the ThinkTech Hawaii broadcast network. This is “Hawaii Together.” Aloha.Until next time, I’m Keli’i Akina. We are on the ThinkTech Hawaii broadcast network. This is “Hawaii Together.” Aloha.
There’s no getting around the basic rules of economics.
For years, I have been saying that the housing crisis is exacerbated by regulatory roadblocks at the municipal, county and state levels. Delays, zoning rules and a long pathway to approval make homebuilding difficult and expensive.
In essence, Hawaii’s lack of affordable housing is an issue of supply and demand: the slow growth of housing creates limited supply, driving up the price.
Now, a new report from UHERO, the Economic Research Organization at the University of Hawaii, has confirmed that regulation is one of the primary reasons for the high cost of housing in our state. Released this week, “Measuring the Burden of Housing Regulation in Hawaii” is an attempt to gauge the regulatory barriers to development in Hawaii relative to those in other states across the U.S. with high housing costs.
Keli’i Akina
UHERO used the Wharton Residential Land Use Regulatory Index, which surveys public officials about local regulation that affects the building of new homes. To get some idea of how Hawaii’s regulatory barriers compare to others in the U.S., UHERO submitted the survey to Hawaii’s county planning departments.
The survey asked how much different parties, such as local government, the community and the state, are involved in the regulatory process. It inquired about rules regulating the housing market, such as zoning restrictions and average approval time. And it asked about the outcomes of such restrictions.
Of the 30 counties in the U.S. with the highest median home values, Hawaii had four of the highest overall index scores — that is, the highest levels of regulation. Hawaii County had the highest regulation score in the U.S., with Maui, Kauai and Honolulu scoring in the top 10.
By state, Hawaii’s regulatory burden dwarfs all other states, outstripping runners-up New Jersey, Maryland, Rhode Island and California.
One of the reasons for the high index score is Hawaii’s strict regulation in the categories of court involvement, state political involvement and local political pressure.
The report notes that, “Because developments often require county council approval and may involve pressure from various stakeholders, projects can be rejected because of a perceived lack of community support, even if the project could hold significant benefits for future residents of the community or for the larger housing market.”
Given that the approval process in Hawaii can be a labyrinthine endeavor involving local challenges, county input and even review by the state Land Use Commission, it’s no surprise that Hawaii scored especially poorly in the categories measuring political obstacles to development. But the state also did badly in the categories that looked at zoning and other regulations.
As president of the Grassroot Institute of Hawaii, I have frequently warned against regulations requiring developers to offer a set percentage of units at below-market rates for purchase. This policy, known as inclusionary zoning, tends to discourage development by making it unprofitable. The UHERO report singled out Hawaii’s inclusionary zoning requirements as a significant barrier to growth:
“[E]ven compared to highly regulated markets, Hawaii counties stand out for pervasiveness of affordable housing requirements. Affordable housing requirements reduce the revenue generated by new projects, reducing the incentive to produce new housing.”
Hawaii’s notoriously slow approval process also came in for criticism. As the report noted:
“The average length of delay in Hawaii is more than three times the sample mean. Approval delays across the counties in the state range from about 14 months in Hawaii county to 18 months in Kauai county. Extreme delays in permitting will generate significant costs and uncertainty for developers, creating a disincentive for new projects.”
One could argue that the regulatory barriers to development do not necessarily cause higher housing costs, but the data suggests a strong correlation between a high Wharton Index score and high home prices. In fact, the study found that every 1 point increase in the Wharton Index translates to an 8% increase in housing prices.
The UHERO report acknowledged that other studies of national-level data suggest that this is a case of causation, not mere correlation.
In other words, high government regulation causes higher home prices.
UHERO’s recommendation echoes the suggestions of nearly every rigorous study of housing regulation and cost: Reduce regulatory barriers and streamline development in order to increase the housing supply and lower prices.
Those who have read the Grassroot Institute’s work on “light touch” density and the Tokyo model will recognize the report’s similar suggestion that counties allow more “as of right” or “by right” development — which means that if a building proposal meets all zoning and land-use requirements, it should be allows to proceed without any need for special permits, variances or other discretionary approvals.
The UHERO study even counters the argument that reducing regulation is a “handout” for developers, pointing out that regulation is often an anti-competitive strategy.
“It is important to recognize that large property development firms are able to extract profits because of onerous regulation, not in spite of it,” it says. “Because navigating Hawaii’s regulatory bureaucracy requires teams of public liaisons, lawyers and lobbyists, only large, established firms can afford to attempt multifamily development. The reduction or elimination of regulatory barriers would increase competitiveness in the market for housing development, allowing smaller firms to provide more housing through as-of-right development.”
While there may not be many surprises in the UHERO report for those who have avidly followed the Grassroot Institute’s work on the housing crisis, it is encouraging to see the growing support for light-touch density and zoning reform.
The data makes it clear that regulation and government interference, no matter how well intentioned, are contributing to the housing crisis. Let’s work together to reduce those barriers and make Hawaii housing more affordable.
Keli’i Akina is president and CEO of the Grassroot Institute of Hawaii.
Once upon a time there was a Governor Dorothy of Hawaii who looked out over her domain and said, “Gee, we’ve got lots of money this year! The economy has come roaring back so we’ve got a big chunk of tax revenue, and we also have a bunch of Federal aid funds.”
So, she proposed giving some of it back to the taxpayers. “Let’s send $100 to every man, woman, and child,” he said, and she sent a bill to both houses of the Legislature to allow her to do that (Senate Bill 3100 and House Bill 2132).
“We’ve got to be careful,” said Budget Director Lion. “We still have federal restrictions in place, and if we don’t do this right the Feds will take back their aid money.”
“We have lots of unmet needs,” said Representative Tin Man. “Now might be a good time to catch up on these many projects we’ve been putting off.”
“I agree,” said Senator Scarecrow. “Have you seen the maintenance backlogs for our schools, university, and airport? It’s terrible. And by the way, I agree with Budget Director Lion.”
So, Governor Dorothy’s two bills died in the Legislature.
“But wait,” Representative Tin Man said after some time had passed. “Maybe this rebate idea wasn’t such a bad idea after all. When I run for re-election this year, I want to show people that I’ve done something good for them.”
“I agree,” said Senator Scarecrow. “Let’s revive the rebate proposal, and we’ll give $300 to each man, woman, and child in a household making $100,000 or less, and $100 to everyone else.”
“But the Governor’s bills died,” said Representative Tin Man.
“Who cares?” replied Senator Scarecrow. “He’s termed out, so he isn’t running for re-election. You and I are, not to mention all of our colleagues. We can mark up another bill to accomplish the same thing and the Legislature can take credit for the idea!”
“Okay,” said Representative Tin Man. “I’ll have my Finance Committee mark up Senate Bill 514 and we can work on it in conference. That bill was from last year’s session, but it’s perfectly okay to dust it off and put it through. It deals with the same subject matter, so no one can call it a ‘gut-and-replace’ maneuver!”
So, the Legislature passed Senate Bill 514, but with most of the amounts blank. (Toto has complained about bills with lots of blanks before, in “Blankety Blank” and “The Future of Blankety Blank.” But people only listen to Toto sometimes.)
“Hold on,” said the Wicked Witch of the Left. “I can see $300 checks going out to help our working families, but why are we coddling the wealthy with the $100 checks? They don’t need or deserve those funds, especially when they are needed for other things. Let’s get rid of that part of the bill.”
“You’ve got to be kidding,” said the Wicked Witch of the Right. “Given the amount of the budget surplus that has been reported to us as taxpayers, you should be looking at $1,300 for each of Hawaii’s taxpayers, not just a paltry $300. How are you going to stimulate the economy with a pittance like that? Let’s revamp that part of the bill.”
“And what about the federal restrictions?” moaned Budget Director Lion. “Has anyone been listening to me?”
In the next few weeks, legislators are going to be looking at this issue among others in conference committees, where no public testimony is needed or wanted, and where the public doesn’t even see the legislators meeting until it’s time to announce the result of their deliberations.
Then we will know what goes in the blanks, and the end of the next chapter of this Frivolous Fable. Will the taxpayers, or some of them, get rebate checks?
By the way, this Frivolous Fable is a work of fiction, and any resemblance to folks living or dead is … well … fictional.
Bills in the Home Stretch
The Hawaii Legislature is done for the year. Its last day for this session was May 5th. It has done all its work on new laws for this season. Some of the bills it finally passed have already been signed into law. Others are awaiting the Governor’s action. Now the important deadlines are June 27, 2022, when the Governor needs to give notice of intent to veto a bill, and July 12, 2022, which is the deadline for the Governor to sign or veto any bills.
Some of the more consequential bills that now await the Governor’s action:
Senate Bill 514 proposes to give every resident a tax refund. The refund amount is $300 per exemption (which includes self, spouse, and dependents) or, for those households making $100,000 or more, $100 per exemption. To get the refund, a resident needs to file a 2021 income tax return on or before December 31, 2022. Many residents have already filed this return. If you are on extension, don’t delay too long! Also, the bill drops $300 million into the State‘s pension program and $500 million into the rainy day fund. We’ve previously covered this bill in a Frivolous Fable.
Senate Bill 3201 fundamentally changes the way tax-exempt organizations are treated under the GET Law. For a nonprofit to be taxable under federal standards, it has to be conducting a business unrelated to its tax-exempt mission. For a nonprofit to be taxable under the GET, it only needed to be raising money. This bill will adopt the federal standards for the GET, making it easier for nonprofits to keep track of the rules. We wrote that this bill would be a game-changer for nonprofits.
House Bill 2511 authorizes a $600 million cash infusion into our Department of Hawaiian Home Lands, To many of the Native Hawaiians who had been patiently waiting for Hawaiian homestead lands for years or decades – more than 28,700 are on the list now – this historic funding seems to be a welcome relief. We pointed out that DHHL experienced some inability to spend down the money it was given; specifically federal funds. As we wrote earlier, we hope that DHHL can put that questionable past behind and do some good for the Native Hawaiians who benefit from the Hawaiian Homes Commission Act of 1920.
Senate Bill 3289 establishes the Hawaii Retirement Savings Program, a concept heavily pushed by AARP this year. The idea is for the State to establish a program that private sector companies and employees can opt into. For small employers that have to pay oodles of money to keep their own employee retirement plan going, it would be a chance for them to ditch their current plan and adopt the State plan, or for small employers who had given up on retirement plans for their workers because of the associated costs, it would be a chance for them to offer retirement plan benefits once again.
Senate Bill 2475 gives an exemption from the GET for stevedoring services, as well as wharfage and demurrage fees that are paid to the Department of Transportation. These fees are unique to the industry of transporting goods by sea. Some time ago, we noted that the federal government came out with an executive order against detention and demurrage charges, and argued that we really shouldn’t be taxing transportation of goods when we depend on that transportation for our very existence. This bill, by knocking the GET off these fees, should be a step toward lowering our stratospheric cost of living. It also promotes more equality between water and air transportation of goods because federal law prevents us from applying our GET to air transportation.
We’ll be covering more of these bills in articles to come.