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‘Well, Johnny, it’s really been a strange session so far’

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It was a good Sunday morning on the last day of February when Johnny Miro once again hosted Grassroot Institute President Keli’i Akina to talk about public affairs on the H. Hawaii Media family of radio stations: 101.1 FM, 101.5 FM, 107.5 FM, 97.1 FM and 96.7 FM. 

Miro’s first question was about whether Akina had been noticing any trends in the current Hawaii legislative session.

Akina’s answer: “Well, Johnny, it’s really been a strange session so far. At times, it looks like there are two kinds of bills that our legislators are considering: ones that are trying to address the COVID-19 pandemic and lockdown, and ones that almost ignore it completely.

In that first category, you’ve got budget bills and efforts to reform the emergency management statute. In the second category, you have big projects like the ALOHA Homes bill, and tax hikes, and legislation that will be tough on struggling businesses like a minimum-wage hike. It is looking to be quite a strange session.”

Hear the rest of this terrific conversation. It’s about 18 minutes.

The complete transcript is below.

2-28-21 Keli‘i Akina interviewed by Johnny Miro of H. Hawaii Media radio network

Johnny Miro: Good Sunday morning to you on this last day of February 2021, on this Sunday. I’m Johnny Miro. It’s the H. Hawaii Media family of radio stations, and it’s our Sunday morning public-access programming, heard on our five radio stations, 101.1 FM, 101.5 FM, 107.5 FM, 97.1 FM and 96.7 FM. 

Joining us once again for a discussion is the president and CEO of Grassroot Institute of Hawaii, grassrootinstitute.org. For more information, it’s Keli’i Akina, Ph.D., president and CEO, once again. Good morning to you, Keli’i.

Keli’i Akina: Johnny, aloha. Really glad to be with you and your listeners today. Wonderful final day of February. We’re going into March, and we’re going into Tier 3. That’s wonderful.

Miro: It is. It’s fantastic. Looking forward to March 25 — allegedly Tier 4 is straight ahead. 

We have a legislative update. That’s the discussion today. Plenty of questions to bring forward, and looking forward to your answers. We’re well within, too, of course, the 2021 legislative session at this point. Right now, currently, are you seeing any themes developing so far?

Akina: Well, Johnny, it’s really been a strange session so far. At times, it looks like there are two kinds of bills that our legislators are considering: ones that are trying to address the COVID-19 pandemic and lockdown, and ones that almost ignore it completely. 

In that first category, you’ve got budget bills and efforts to reform the emergency management statute. In the second category, you have big projects like the ALOHA Homes bill, and tax hikes, and legislation that will be tough on struggling businesses like a minimum-wage hike. It is looking to be quite a strange session.

Miro: All right, let’s start with a lockdown, and the governor’s emergency orders. The Grassroot Institute recently published a report examining how to reform the state emergency management law. Are there any bills right now that would change how the lockdowns work?

Akina: Johnny, our report from the Grassroot Institute called “Lockdowns Versus Liberty,” focused on what changes we could make to improve Hawaii’s emergency powers law and better handle future crises. One of the things we recommended was restoring the balance of powers by creating a legislative check on the governor’s power to extend an emergency almost indefinitely now. Fortunately, there is a bill that proposes exactly that change; it’s HB 103, which is moving through the Legislature.

It requires the approval of the Legislature to extend an emergency past 60 days, though it does not include an automatic renewal clause if the Legislature doesn’t act, and that’s going to be quite an improvement. It also puts time limits on the suspension of laws. It requires a rational basis for the suspension and clarifies the powers of the governor or mayor in an emergency, which cannot be inconsistent with the Constitution. We’d like to say it’s a step in the right direction to address a lot of the problems and questions about executive power that come from the lockdown.

Miro: Talking once again with the president and CEO of Grassroot Institute of Hawaii. That would be Keli’i Akina, grassrootinstitute.org for more. 

What about the suspension of transparency laws? Is there anything being done to keep that from happening again?

Akina: That’s been a real concern at the Grassroot Institute. In theory, there’s a bill, HB 103, which would help address this issue, since it provides a mechanism for limiting the governor’s emergency powers. But there’s another bill still moving, which is called SB 134. That would prohibit the governor or mayor from suspending requests for open records or vital statistics during an emergency. 

There really isn’t a need to suspend transparency during an emergency. Hawaii law already provides enough flexibility to deal with these kinds of delays. This is an area where we really have to preserve our rights and our liberties.

Miro: OK. The Hawaii economy is still recovering after last year’s financial crash, so what are lawmakers doing about the economy?

Akina: It will be in recovery for a long time, that’s for sure. It’s currently a mixed bag. Let me stay on the bright side: Some lawmakers seem to be listening to recommendations listed in our report, which we call “Roadmap to prosperity.” 

In that report, we mentioned easing the state’s hurdles to medical facilities. For example, one bill we like, HB 224, would do just that. It will exempt certain medical facilities from certificate-of-need laws, which get in the way of providing medical facilities.

That bill would make it a lot easier to build certain medical facilities for psychiatric services and dialysis services, and that would help lower costs and increase access for health services. We think that’s a great example of how government can lift barriers to businesses. 

In other words, just keep doing some of the things that we’ve had to do now in the pandemic lockdown, and don’t go back to some of the restrictions we had before that. It’s a win-win for businesses and consumers. We’ve got lots of other examples of that.

Miro: Are there some other proposals at the Legislature that could help the economy?

Akina: Certainly, there are many things lawmakers can do to bring back the economy. For example, did you know that Hawaii has a law that gets in the way of bottling water? Hawaii is the only state in the nation that requires bottled water to be bottled only on production lines, exclusively dedicated to bottling water, and there’s no health reason why that’s necessary. This prevents many local companies that bottle other liquids from bottling water. SB 348 is moving through the Legislature now, and it removes that regulation. It’s another great example of how lawmakers can get government out of the way of businesses and help the economy.

Miro: How about taxation? Are there any tax proposals at the Legislature?

Akina: I wish I had better news for you, but we’re still in danger of some great increase in taxes from our Legislature if these bills go through. First of all, Hawaii’s unemployment taxes are scheduled to triple this year, unless the Legislature does something. Thankfully, lawmakers heard our concerns about that, and they’re attempting to lower the tax somewhat. In the current proposal, the unemployment tax would only raise, or go up, by 38%. We still think that’s too much, which is why we’re asking lawmakers to keep the unemployment tax unchanged this year.

Miro: Are there other tax proposals?

Akina: Yes, and that list is very long. For example, right now, there’s a proposal for a liquor tax surcharge — that’s a tax on a tax. There’s also a bill for a conveyance tax hike, and a car-sharing tax hike, and a tax hike on second homes, a transient-accommodations tax surcharge, a rental-car tax, a capital-gains tax hike, a general excise tax hike on tobacco products, a new state tax on property. 

Even if you can’t live through all of this, there’s now a proposal for a new death tax hike, and more. We counted dozens of tax-hike proposals, and hopefully, we’ll see most of those fall by the wayside. But they do show you the attention of many of our government leaders.

Unfortunately, it seems lawmakers are trying to tax their way to a better economy, which is a very bad strategy. They want a bigger budget, and that could end up backfiring and make the economic recovery much, much slower. 

Instead, this is what we suggest: Lawmakers should focus on getting out of the way and allowing the economy to spring back to life. That would probably help the state’s budget deficit as well. 

Right now, Johnny, things have gotten so bad that even small economic gains can have a big effect. We saw that recently when the Council on Revenues revised their predictions up just by a few points. That was enough to make a real difference in the budget.

What that basically means is the pathway to ensuring a better economy and better revenues for the government is not more taxation; it’s getting out of the way and helping the economy to recover. 

The best way for the state to raise revenues is, ultimately, then, to let the economy grow. That means cutting regulations, cutting taxes and giving businesses the chance to rebuild. Bottom line, we’ve just got to make Hawaii a more attractive place for local and incoming businesses.

Miro: Speaking with Keli’i Akina, Ph.D., president and CEO of Grassroot Institute of Hawaii. How’s the state budget, and is there a shortfall right now?

Akina: That’s the other side of the equation. On the one hand, there is the economy itself, which should be driven by the private sector. On the other hand, we’ve got the cost of government, which is the state budget, and it is so exorbitant, and it’s growing so quickly that it’s a real challenge for the economy.  

How’s it doing? It all depends upon who you ask. If you were to ask the governor back in December, he would have said there’s a huge shortfall, and we need to implement furloughs and taxes — remember that? If you ask him today, he’ll say that there’s no need for furloughs and tax hikes.

The reason for this is because tax revenues are coming in much higher than projected, and the windfall is shoring up the budget. Additionally, the federal government passed a stimulus package, and that’s going to inject hundreds of millions of dollars into the state budget. 

That begs the question: If that’s the case and revenues are coming in, why in the world are lawmakers trying to increase taxes?

Miro: Why are lawmakers trying to increase taxes?

Akina: Maybe they haven’t gotten the memo. As Gov. Ige said to us recently, tax hikes are not needed at this time. That’s why the Grassroot Institute is submitting comments on many of these tax bills, explaining to legislators that this is a terrible time to raise taxes. 

You know, our economy is fragile, and we already have the second-highest overall tax burden in the country. Policymakers should instead be looking for ways to cut taxes and lower the cost of living.

Miro: Is the budget balanced?

Akina: Not quite. Remember all those windfall revenues that the state said it was getting? Instead of living within our means and reducing spending, the state is using that as an excuse to increase spending. This is despite the fact that the state is taking on massive amount of debt to keep the spending going. 

On one hand, the government will tell you the budget is balanced because revenues and expenses match each other within a given year. But what they’re not telling you is that there’s massive debt. It’s kind of like saying, “Honey, we can pay for the bills this year so we’re OK.” But in reality, we’ve got credit card debt that’s sinking us.

Lawmakers are even waiving the requirement to pay our debt service bills for the state’s public-health benefits until 2025. Suspending the payments is supposed to free up about $2.3 billion for the state and county budgets over the next few years. 

In the long run, if you do the math, it’s going to cost $8 billion in interest-deferred payments and other costs. That’s irresponsible and reckless management of the budget. This is a problem with running up liabilities; over time, the taxpayers always end up paying a higher price.

Miro: The old “pay me now or pay me later.” What about the minimum wage? Are lawmakers pushing for that?

Akina: We’ve got a bill, SB 676, that would raise the minimum wage to $12 an hour. Now, that’s about a 20% increase over our current minimum wage of $10.10. 

What most people don’t understand about minimum-wage hikes is that they aren’t a very good way of helping working families. They really end up hurting the people they’re intended to help. The research shows that some people get raises, but others lose their jobs entirely because businesses have to make hard decisions about how much staff they can afford to keep. 

It makes it more expensive for businesses to employ people. And that’s before you take into account the struggling economy in Hawaii that’s harming businesses already.

We’ve been one of those states most affected by the lockdown, and our unemployment rate is still the highest in the country. What we want is for local businesses to get to the place where they can start rehiring, but a minimum wage hike will have the exact opposite effect. 

It’s a bill that will actually slow our recovery from the pandemic and lockdown. If businesses are not willing to hire, or are not hiring people at the same hours as they had before the pandemic, in the end, it’s going to hurt the very people that the minimum wage is supposed to help.

Miro: The cost of housing, it’s always something that comes up at this time of the year. Are there any efforts to address the housing crisis?

Akina: There have been some bills that try to address the lack of housing, but most of them seem to be very narrowly focused and don’t address the big problem. There’s SB 1, the ALOHA Homes bill, which wants to build leasehold properties for residents who meet certain qualifications. 

The claim is that these lease government projects will pay for themselves. But it’s really hard to see how this isn’t a large capital expenditure while we should be tightening our belts. Not to mention the issues involved with offering leases instead of letting people buy their homes, and of course, not to mention, having the government enter a massive project like this and manage it. It may do as well as it has managed the rail or construction of the stadium.

There are several bills that look to reduce the bureaucracy involved in getting approval for construction of affordable housing. For example, SB 137 would give counties more wiggle room to reclassify land, and that could help provide more land for housing. 

There are so many ways to help provide more housing that could be done, and this is what I hope our legislators will take a look at. For example, let me give you just a real quick short list: allowing smaller housing developments, or allowing smaller lots, or allowing taller buildings, or allowing extra kitchens, or allowing accessory apartments, or allowing subdivision of existing structures, reducing political approval process, and so forth, cutting down the paperwork. 

Just do a handful of these things and you’d increase the amount of housing available on the market. Lawmakers should learn more by grabbing a copy of our report, which we have on our website, and we’re grateful that many lawmakers have been looking at it. It’s called “How to Build Affordable, Thriving Neighborhoods” by Grassroot Institute, at grassrootinstitute.org.

Miro: Keli’i Akina, the president and CEO of Grassroot Institute of Hawaii, a couple more questions. It definitely sounds like it’s been a busy legislative session so far. What are you hoping for by the time the session ends?

Akina: We’re nearing the point where legislators have to buckle down and think about what really needs to get accomplished in this session. I’m hoping that they’ll seriously think about the measures that must be taken to address the real effects of the COVID lockdown, especially the impact on businesses. 

Here’s what we’d like to see: First of all, reforms to the emergency-management law so that we can restore the balance of powers and protect transparency so that one office, the governor or mayor, won’t have the level of power that it has, and it will come into check by the public or at least the Legislature.

Another thing we’d like to see is a fix for the automatic hike in the unemployment tax so that employers won’t be paying triple this year. They can’t afford that. That’s really going to hurt business. 

Another thing: We’d love to see a reduction of regulations that create a barrier to our economy from the pandemic. That includes the reform of the certificate-of-need laws, as well as the GET exemption for groceries and medical services. We’re one of the few states that still taxes grocery and medical services. It’s a regressive tax that hurts the poor.

We also need to see zoning reform to help grow the housing supply, and an end to bills that will increase the cost of living and slow our economic recovery. That includes various tax hikes as well as the minimum-wage hike. 

There are so many things that the lawmakers can do to help bring the economy back. We really need to work together, and it’s not complicated. It’s not rocket science. It’s just practicing best-practices that have worked all over the country. That’s what we’d love to see happen at this legislative session.

Miro: Another very informative discussion with Keli’i Akina of Grassroot Institute of Hawaii. Mahalo for your time this Sunday morning, and you can find them once again at Grassroot Institute or grassrootinstitute.org. President and CEO of Grassroot Institute of Hawaii, Keli’i Akina, it’s been a pleasure once again. Mahalo, and have yourself a fantastic Sunday.

Akina: Same to you, Johnny, and all the listeners, much aloha. Until next time, we’ll be here at the grassrootinstitute.org.

 

 

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