Joe Kent and Ted Kefalas of the Grassroot Institute of Hawaii covered a lot of ground during a recent appearance on state Rep. Lauren Matsumoto’s thrice-weekly “Capitol Convo” radio program on AM 690 and FM 94.3 The Answer.
Recorded July 19, the topics included Gov. Josh Green’s recent housing emergency proclamation, medical licensure reform, cryptocurrency, taxes, the state budget, corruption, government transparency, victories and losses during the 2023 legislative session, and even the “why” behind the work of the Institute.
“We don’t have shareholders, and we’re not beholden to a political party,” said Kefalas, director of strategic campaigns for the nonprofit policy research organization. “We do this because we truly love Hawaii, and we want to see it prosper.”
Regarding the housing edict, Kent, who is the Institute’s executive vice president, said lifting housing regulations to allow for more home building is “a good thing.” But doing it via executive order, “that’s kind of temporary, quasi-questionable and subverts the legislative process.”
Regarding legislative wins, Kent said his favorite was SB1437, which allows members of certain Hawaii businesses to deduct their state income tax liabilities from their federal income tax liabilities.
“Absolutely,” said Matsumoto. “That was one of my favorite bills as well.”
Matsumoto said she is one of the 40,000 subscribers to the Institute’s newsletter, and “even as a legislator, it’s really helpful because there’s 4,000 bills that get introduced every year, and just the amount of information that we take in, I really appreciate how Grassroot Institute breaks it down very simply to understand.”
To hear the entire hour-long interview, click on the video below. A complete transcript follows.
7-19-23 Joe Kent and Ted Kefalas on “Capitol Convo” with Lauren Matsumoto
Hawaii Rep. Lauren Matsumoto: Aloha and good evening. Welcome to “Capitol Convo” where we have conversations about the 2023 legislative session with conservative state House representatives.
I’m Rep. Lauren Matsumoto, and I serve in the Hawaii state House as the House Minority Leader, and I have the privilege of representing my hometown of Mililani and Mililani Mauka.
And I really am excited for today. “Capitol Convo” is an opportunity for us to invite the public into session where we share information about what’s going on at the Capitol, how to get involved in the legislative process and how to address community issues.
And I have really … [I’m] so excited about who we’re talking with today. We are discussing some of the bills Gov. Josh Green recently signed and that he vetoed, and to help us dive into this topic is Grassroot Institute of Hawaii.
The Grassroot Institute is a nonprofit policy research organization that seeks to educate people about the values of individual liberty, economic freedom and accountable government.
We have Joe Kent here. Hey, Joe.
Joe Kent: Hello.
Matsumoto: Joe is the executive vice president of Grassroot. And now we also have Ted [Kefalas].
Ted Kefalas: Hey, Rep. How are you?
Matsumoto: Nice to have you on again, Ted. And Ted is the director of strategic campaigns at Grassroot. So welcome, and thank you so much for joining us today at “Capitol Convo.”
Kent: Thanks so much for having us.
Matsumoto: Yeah. So, again, to everybody listening, I want to remind you, please feel free to call in any time over the next hour at 833-296-8255.
And this airs live every Monday, Wednesday and Friday from 5 to 6 p.m.
So, Joe, I know we’ve had the Grassroot Institute on the show previously, but for those who might’ve missed our conversations, can you please tell us about the organization and the work you do?
Kent: Sure. So, the Grassroot Institute is a team; we’re a nonprofit that looks into how the world works in Hawaii basically and tries to explain it in a way that everyone can understand. So, um, but we also tackle questions like: Why is the cost of living so high? Why is milk so expensive? Why is shipping so expensive? Why was the rail so expensive?
A lot of these have to do with expenses. [laughs] And so we’re trying to focus on how to bring down the cost of living in a state that has the highest cost of living. And, of course, our focus is to do that in a way that respects individual liberty.
You own your life, your property, your body, and you should be able to do what you want with that as long as you don’t infringe on the rights of others. And also that respects the freedom to trade with others and that holds the government accountable.
So, we’re basically a government watchdog, but also a PR [public relations] firm for liberty. [laughter]
Matsumoto: Nice. And that’s so important, the work you do. I do surveys of my community every year — and I’ve been in office for 11 years now — and the top issue that comes back almost every year is cost of living. And if it’s not the top, it’s No. 2. And so the work that you do is really, really important.
And so, Ted, you’ve been on the show with me before. What role do you play with Grassroot Institute?
Kefalas: Yeah, so as you mentioned earlier, I’m the director of strategic campaigns. And essentially, what that means is I try to take the good work that we’re doing at Grassroot when it comes to research or policy briefs and really trying to spread that to legislators, to the media, to the general public. And just trying to have people understand some of the ramifications of some of these laws that are trying to get passed.
I previously worked in politics in D.C. and Virginia, and you know, that gets a lot of the media attention. But really where a lot of the action happens is at the local and state level. And that’s where people are going to feel a lot of these bills and feel the impact of these things the most. And so, I really love being involved in that.
You know, at Grassroot, we don’t have shareholders, and we’re not beholden to a political party — sorry, Rep.
Matsumoto: That’s OK. It’s better that way.
Kefalas: You know, we do this because we truly love Hawaii, and we want to see it prosper. So, anything that we can do to try to break things down and just help people understand what’s happening — we get the biggest thrill out of that stuff.
Matsumoto: Yeah. And I enjoy getting to see you guys down at the Capitol, really sharing your thoughts with us as legislators. It’s so important that testimony that you turn in. I think people often forget that component of the legislative process.
But being able to hear from people on the issues and whether that’s really going to help them or if these bills are going to actually end up hurting them, I think is something that’s really important.
And I love that you bring up too — the national news gets all the attention. It’s what you hear day in and day out — but really what affects your life the most is what we pass at the state and local level. And really wanting to focus on that a little bit.
But I know, Ted, you talked a little bit about how you got involved. But Joe, how did you get involved in not just Grassroot, but getting involved in politics?
Kent: Yeah, well, I started out as a humble music teacher in the public school system. And I had a class of kindergarten through fifth graders on Maui, and we would go and do choir competitions and things. And I always wondered, like, “How do we make the school system better? And how do we fix this?”
I saw a lot of teachers who were leaving the system. It seemed like all the teachers who were leaving were the best teachers and the ones that stayed behind were not necessarily the best teachers. And I was like, “Well, what’s going on here? This is a kind of a funny incentive system that we have here where you can’t make it as a good teacher.”
And so, I got really involved in economics, and of course, that leads to politics, right? I actually wrote a documentary — made a documentary — called “The Price of Paradise” based on Randy Roth’s book, “The Price of Paradise.”
And the Grassroot Institute saw my documentary — asking all these types of questions — and they said, “You should work for us now instead.” So I said, “OK, let’s do it.” So now, instead of educating kindergartners, I’m helping to educate the whole public and lawmakers and the media and everyone else.
Matsumoto: That’s, that is awesome.
Now, I have to ask, it’s been a little off-topic: What musical … Do you play musical instruments?
Kent: Oh yeah! So, I play piano, guitar, ukulele, drums, I sing, I write songs.
Matsumoto: Nice. Do you play anything, Ted?
Kefalas: No, but I listen to him play it in the office.
Kefalas: Makes the day go by a lot faster.
Kent: Our whole office, you could actually start a band. I mean, we’ve got Mark Coleman on the drums — he’s our editor. And then Keli‘i [Akina], he’s a great singer, if you didn’t know that.
Matsumoto: I didn’t, actually.
Kent: So yeah, we could actually go on tour.
Matsumoto: Nice. My dad’s a musician, so I — actually a teacher at Nanakuli High School for 32 years — and is a musician. Just had his first EP released and so I grew up listening to him play every night. And so it’s kind of backwards growing up, I used to be like, “Dad, turn down the music. I’m trying to study!” [laughs]
So that was fun, but I want to jump right back in. Last week was the deadline for Gov. Josh Green to sign or veto bills from this past session and kind of a big week.
Ted, can you give us a quick rundown of some of the bills that the governor decided to veto?
Kefalas: Sure. Yeah. You know, first I want to start just with the state budget. That was a big one that he line-item vetoed. And I want to praise Gov. Green for that line item veto after, you know, state legislators spent close to almost all of the expected surplus.
So, Gov. Green put in, I believe, 22 line-item vetoes equaling about a billion dollars. And it really tried to help, I guess, balance what’s going on.
Unfortunately — funny enough — we’re still a billion dollars past the spending cap. And that’s a constitutionally mandated spending cap that we just were able to blow past.
But you know, ironically too, a lot of the complaints with the governor’s cuts were that it was cutting way too much and that we couldn’t afford this stuff. But, a lot of that funding was actually an increase from 2023 funding.
For example, Department of Education, that general fund is going to be — the budget is 8% more than what they got in 2023. So for folks that were saying that the Department of Education is getting nothing out of this budget, that’s just not true.
The other big one was SB945. Now that’s the cryptocurrency bill. That was an 80-page bill that would have given the Division of Financial Institutions way too much control. It would have allowed them to kind of rewrite the law at their own whim and really force cryptocurrencies to kind of wait on whatever the division wanted.
And so, we all know cryptocurrency is a risky investment. But if we really want to get serious about diversifying our economy, then we have to look at new innovations like this and allow those kinds of companies or new technologies to prosper.
Matsumoto: Absolutely. And just to add on what you’re talking about: With spending out the whole surplus, we passed very few tax relief bills that was actually going to bring money back into the pockets of the people of Hawaii, right?
I was so excited at the beginning of this year going, “Great, we have a surplus. Now is the time that we can actually pass a lot of these tax relief bills or things to really help the people.” And, um, we had maybe one or two that are really notable but other than that, we didn’t really have a whole bunch.
Kefalas: Yeah, you and I both. I mean, we were really trying to push, as you know, we were trying to push the GET [General Excise Tax] exemptions on medical services, on groceries. And unfortunately, the response I kept hearing from a lot of your colleagues were, “We can’t do this because we don’t, we can’t lose the funding and we can’t lose the kind of revenue in the general fund.”
Kent: Yeah. And at the time, we had the huge surplus.
Now, it’s kind of weird because the budget is programmed backwards. You program how much you want to spend and then after the legislative session, you find out how much you’re going to get.
And that’s kind of what happened this time, it was like, “Happy days are here again! We’re in the money!” And I think we had just so much money that people didn’t even know what to do with it and where to spend it.
Even though we had that environment, they were still afraid to pass tax reform and still afraid to give any of that to anyone.
Now, Gov. Green had his Green Affordability Plan, which is this sort of slate of measures that we can talk about. And some of that passed — I think about $100 million of that. But they could have passed a lot more tax relief.
Now, like I said, the budget is done upside down and backwards. So after you pass it, you find out, “Oops, wait a second. We don’t think we’re going to get as much money as we thought.” And that’s what happened. And then they saw the budget bleed red. I mean, it’s all this red ink on the pages.
And so the governor had to veto something. And so I think he vetoed around a billion dollars or more just to balance it, which is unpopular to do in this state. So we tried to give him a pat on the back for that.
Matsumoto: Absolutely. And you mentioned removing GET on food and medical services. Our Republican Caucus has put in that bill for at least 15 years. I have personally put in that bill for 10 years and just waiting to see that pass. That’s not a revolutionary idea; a majority of the rest of the states do this.
Matsumoto: It’s crazy to me that in a place where we talk about the cost of living so often, that our Legislature is not willing to even hear the bill about bringing a lot of relief, and that’s immediate relief.
I know we’ll go into maybe Gov. Green’s plan later, but those are all in tax, many of those were in tax credits. Right?
Matsumoto: And so it’s a complicated process in order to get that relief, versus making it where you don’t even have to think about it. You’re going through your everyday life, you already get that relief when you go to the grocery store.
So, I’m going to go back to, you know, you mentioned SB945, the cryptocurrency licensure bill. Joe, can you go a little more into detail about why that was a bad bill?
Kent: Sure. Well, it was 83 pages, first of all — that’s a big bill. I had to stop my nightly novel reading in order to read this bill; it was so big.
And that’s a lot of regulations for a new innovative cryptocurrency industry. I mean, these companies are just trying to figure out if people even want this thing. And now they have to set up all of these requirements to meet the state’s needs.
Hawaii was dubbed the worst state in the nation already for cryptocurrency. And now they passed this bill and put even more regulations on top of that.
Of course, Hawaii was dubbed the worst because we have this odd quirk in our law that says that if you have one bitcoin, you have to also have however much dollars worth of that bitcoin.
So today, bitcoin’s worth $30,000. You have to have one bitcoin, plus $30,000 in the bank to start your business — something like that. And so you have to have double the money that a normal company would have to, would be, required to have.
And so the problem with that is, these companies don’t have double the reserves. And so, a lot of the companies left Hawaii. They were unable to start here, so that’s why they created this little sandbox.
Now we’re halfway through the sandbox. The sandbox goes for one more year, and so there’s really no reason to create a whole licensure scheme yet. If you wanted to do a licensure scheme, wait till the sandbox is done and then look at it.
And in the meantime, try to cut the number of pages down from 83. Maybe cut that in half, because we want to try to give some of these entrepreneurs a chance.
Not that I want everyone to buy nitcoin, by the way, or any other cryptocurrency. I mean, you might lose your shirt, so buyer beware of these things.
But if you don’t have a market that allows failure, then you don’t have a market that allows success either. And so, we need to provide people the opportunity to succeed.
Matsumoto: Absolutely. And Joe, I believe we have a call coming in. Hello?
Caller 1: Hello, everyone. Hello. I heard that Grassroot Institute was on the air tonight, so I tuned in. I just wanted to thank them for all of their hard, hard work. I know they get a lot of opposition here, but I really respect and appreciate them, so I wanted to give them a shout-out.
But I do have a question, speaking of Gov. Green. I understand that he declared emergency powers to help with the housing crisis. I’m not a big fan of emergency powers; I didn’t appreciate [Gov. David] Ige’s emergency powers overreach during the COVID lockdown.
So, I’m wondering what he expects to do with those powers and how long they’re going to last. And is this going to help the homelessness problem or what exactly is he trying to do with that?
Kent: Yeah, so the proclamation that the governor issued is supposed to expire Sept. 15 of this year. And, um …
Caller 1: Supposed to.
Kent: Supposed to. Right? But as we know during the COVID era, they kept on going and going and going.
And so, the way that the proclamation is written, it almost looks like they’re planning on going for three years.
Now, I’m of a mixed opinion on this because on the one hand, the things that he’s trying to do, he’s trying to lift housing regulations to allow for more home building.
OK, that’s a good thing; they should definitely do that. But this is also done in a way that’s kind of temporary, quasi-questionable and subverts the legislative process.
So, you know, we’re asking legislators to look at this proclamation and use it as a guide, as a to-do list, for what to do at the Legislature to permanently lower the barriers to housing.
But, you know, in the meantime, he has issued this proclamation. I don’t know if groups are going to sue. I don’t know if there’s going to be Supreme Court weighing in on whether or not this is going to continue. So, we don’t know how temporary this is going to be.
It’s kind of like a sandbox, kind of like that crypto sandbox I talked about, by the way. And so, let’s see if anything comes of this since it happened. And if anything does, let’s learn from it and enact policies that are more permanent that could help.
Matsumoto: And just like Joe, I have mixed feelings as well as a legislator. My first thought is: Let’s solve this in the legislative process. I mean, these ideas and these bills really should have been put in in January and gone through public testimony; gone through that whole process so we come out with really great ideas.
So, I also have some mixed opinions because I’m hoping that we’re able to deregulate some of these things so we’re able to produce more housing.
A lot of people have issues as we’ve seen all the time, but also making sure that they’re not just emergency proclamations done at any time, and we really are going through the proper process.
Kefalas: Yeah, it was certainly a mixed bag for us because I think in reading it, there was a lot of things that we’ve been talking about for a long time. We’ve been trying to kind of streamline the homebuilding process and figure out how to cut through some of that red tape.
And so, you know, part of us was saying, “Oh, this is great. This is finally going to get us there.” But then, you know, flashback to the COVID emergency proclamations, and it wasn’t that long ago. So, you know, we understand too that this isn’t necessarily the governor’s place to just unilaterally decide things like this.
So, yeah, it was definitely a mixed bag for us. And we’re hoping that it at least results in some homes being built because at the end of the day, that’s the end goal. But we’ll see, like Joe mentioned, you know, if it’s going to end up being challenged in courts and how long it ends up getting dragged out for.
Caller 1: Because if the cost of living isn’t our biggest problem here, I don’t know what is. That’s just my personal opinion.
Thank you very much. I appreciate what you guys are doing.
Matsumoto: Thank you for calling in. I think the three of us in this room agree that the cost of living is definitely our biggest issue.
Kent: Oh yes.
Kefalas: Yep, and most people spend their money on rent or a mortgage or things like that. So, you know, the cost of housing is a huge factor into that cost of living.
Matsumoto: Absolutely. Again, please feel free to call in any time over the next hour if you’re out there listening at 833-296-8255. We would love to take your questions. I’m here with Joe and Ted from Grassroot Institute.
So, I’m going to go in another direction now. Another bill that you all have been talking about for a while is HB1090, which is a bill that would reform the state’s ocean recreation commercial permits. What would that really mean?
Kefalas: So essentially, it’s a bill that would really impact dozens, if not more, businesses across the state. HB1090 is a bill that was meant to help DLNR [Department of Land and Natural Resources] control the number of commercial permits issued for boat ramps in protected ocean areas.
Essentially, DLNR has come out and admitted that there are more permits out there than should be. But business owners, folks that have had a permit for years, are understandably concerned because this bill would have stopped — let’s say, tens or 20-plus — people from being able to get that permit and operate.
So, you know, it prioritized things like just being in business the longest. And whoever was in business the longest would get a permit. It didn’t prioritize anything like protecting the wildlife, protecting people, protecting the reefs. These were things like manta ray tours and fishing charters.
So, our big concern too was that this would put people out of business. You know, you think about even some of these small mom-and-pop shops that employ 10 people. Well, now all of a sudden, that’s ten people that are unemployed.
And so, it didn’t seem like this was necessarily the best thought-out plan. And I think it needs a lot more conversation with the stakeholders involved. And so, we’re glad that the governor was, you know, saw it the same way and he vetoed it.
Matsumoto: So both of these bills have been vetoed. For those listening out there, what do you think’s next for these bills?
Kefalas: Yeah, so Hawaii, we have what’s called a biennial legislature. And that means that bills that don’t pass in the first year get carried over. A bill can be revived, essentially, and it’s revived from where it was at the close of that first session.
So, if a bill passed crossover, it doesn’t have to pass crossover again. But at the end of the second year — once elections happen — then we hit a reset button.
So, those bills I mentioned are going to come back up again next year. But we’re hopeful that we can fend them off.
And you know, again, there’s also some good bills. We mentioned the GET — we’re hopeful that we can restart conversations on that.
We put in a bill this year, obviously the GET on medical services as a whole. But we also put in kind of a, what we were dubbing as a fail-safe that would just exempt GET from Medicare, Medicaid and TRICARE because we’re the only state that taxes those things — the only one.
And so, we thought, “Well, this is an easy, easy conversation. Nobody is really going to fight against it.” And we got that bill all the way to the end up until the [House Finance Committee], and then it just didn’t get heard.
Matsumoto: That’s the fate of a lot of my bills.
Kefalas: Yeah. I know there are a lot of doctors and a lot of people that are struggling to get access to medical care, that saw that, and it was really disappointing. But hopefully, we’ll get another shot at it this next year.
Matsumoto: And I’ll go back to the testimony. I think that’s why it’s so important for people to turn in that testimony and to really push for the bills that are really great. I think often we see the rally when people see the bad bills, but we really need that rally for those really great bills also.
Kefalas: Right. And it’s about getting involved too. But meeting with legislators, calling them, emailing them. You know, I’m sure your staff gets a lot of it. But it’s about just conveying that message.
And yeah, you may not be able to speak with the legislator directly, but just to be able to share your viewpoints and let them know that something is good or bad. That can really help move the needle on a lot of these things. Because, to be quite honest, you’re not getting thousands of phone calls; you’re getting a few. But if you were to all of a sudden get 25, 50 phone calls on the same issue, you would start thinking all of a sudden, “Wow, this is a big problem in my community.” So, you know, I just want to encourage folks to really get involved.
Matsumoto: And I always tell people: There’s the different levels. It’s always great to get involved in any way, shape or form. But the online petitions, I would say, would be like the lowest level where you just signed your name. I can’t even email you back because it just has your name on there. It helps though because sometimes I will get 3,000 of them within a week. So, you do pay attention, but I would say that’s the lowest form.
And then, people sending an email to everybody. I always recommend, instead of, they have that all reps and all senators button — avoid that if you can. I would send it directly to the individual and take time to just send it to each of us. You know, there’s 76 of us. It does take a little while, but we, I will say, honestly, we pay a lot more attention when it’s coming directly to me rather than the all-reps and all-senators button.
And then, of course, a phone call — like you mentioned — that goes a long way. And then, best is in person. I can tell you, when I’m voting, and I had a sit-down conversation with somebody, I remember their face and what we talked about when we’re voting.
So, it really does truly make a difference when you take that time to make the effort. But I always like to list the different levels, and people often think that the email is like testimony and they’re also different, right? One goes on public record, one is just nudging us to go a certain way or share your thought process. But sometimes people think that their email is actually public testimony, so I always want to differentiate that.
But we talked about some of the bills that have been vetoed, but he also signed a few of the good bills into law. Do you have a favorite bill? Or what do you think is one of the best bills that the governor signed?
Kefalas: Oh yeah. I think my favorite one is probably one that we helped introduce. It’s SB674, and it allows Hawaii to enter the Interstate Medical Licensure Compact. Sorry, tongue twister there. Now joining this compact is really going to make it easier for doctors that are from the other 37 or so member states to obtain a license — a Hawaii-specific license — and practice here. That should really help ease the doctor shortage.
So, you know, we talk so much about it, and we have … we’re currently short about 800 doctors. And it’s huge — people on the neighbor islands feel it, even here on Oahu we feel it. So this is something that can give us an immediate impact and really help jumpstart that.
So, according to the staff for the compact, each state that joins the compact sees a bump of about 10% to 15% in licensed physicians. So, we can quickly do the math, but there’s about 3,300 active practicing physicians here in Hawaii. That means 330 new physicians that would get licensed.
By no means is it a silver bullet, right? It’s not going to solve that 800-person shortage, that 800-doctor shortage overnight. But it is something that’s going to show immediate relief for folks that need it.
And so, we’re hopeful that other things, like the GET exemption on medical services, will get passed in the future years. But for now, this is something that’s really going to be a game-changer for us.
Matsumoto: Absolutely. That was one of my favorite bills as well. Joe, do you have any favorite bills?
Kent: Yes. You know, I wish I could remember the number of it, but it was the pass-through entity bill.
Matsumoto: I never remember the numbers. [laughs]
Kent: [laughs] So basically, there was a tax cut this year for certain businesses that make use of the pass-through entity feature of federal tax law.
The federal tax law has a quirk in it, which allows for a reduction in business taxes for certain types of businesses. It’s really complicated to explain, but it costs the state no money. It’s a federal tax cut, but the state has the power to implement it.
And Hawaii … for Hawaii, it should have been a no-brainer. It was a no-brainer, and I’m so glad because they did pass it. So that’s another big win.
I mean, Hawaii has among the worst business climates in the nation. We’re typically at the bottom of the list because of our high taxes. And so, anything we can do to …
You know, they always say, “Oh, we need to raise taxes to raise more money.” But, it might be that the opposite is true. In some cases where taxation is really high, studies have shown that lowering taxes actually can net more benefit.
Now, that benefit comes year after year, once your state and area is known as being more favorable to business. But, it does come. So, this is a step in that direction, and hopefully, we can continue that way.
Kefalas: Yeah, and just to kind of build on your point — not to belabor the point about the GET — but that’s a perfect example there, where if we continue to tax these doctors and push them out of the state, all of a sudden, we’re not going to have anybody left to tax.
Kefalas: So, you know, the revenues will inherently be zero, and it’s something that, it’s a delicate balance that we need to find.
Kent: And it’s even worse than that. If you look at the clinics and doctors’ offices across the state, I mean, these people are just crying. They’re having to close their doors. We’ve talked to a doctor on Kauai who is running the last clinic there.
He said he hasn’t taken a salary in six months. He’s running the hospital for free because they don’t have enough money. And, you know, these hospitals operate on very thin margins, and that GET pushes them into the red. So it’s kind of an emergency situation for the hospitals right now.
Matsumoto: Absolutely. I mean, I think one of my favorite bills — that was my favorite bill, Ted, actually — I mentioned that on “PBS Insights.” But I also liked HB954, which is raising the earned income tax credit and the food excise tax credit. I think that was something that was really beneficial for people; I’m glad we did this.
I know we had talked a little bit about, you know, that it’s kind of a bummer that it unfortunately no longer indexes the state income tax to inflation. But I think, still, that was something that we took something in the right direction to provide some relief for people here in Hawaii.
Kent: That was part of the governor’s GAP plan, I believe. And, yes, it did provide, I think, about $100 million in tax relief to low-income individuals and families across the state — so, that’s a good thing.
Tax credits as a philosophical concept are always like a road I could go down all day long, I could talk about that. But on net, it’s good.
Matsumoto: Awesome. So, Joe, the state budget was a big deal this year. Any more comments about that?
Kent: Yeah. So, you know, it was kind of a roller coaster; up and down. We had a $2 billion surplus, then we’re now at $2 billion or $1 billion in the red. And these fluctuations, I think, need to give legislators pause about how much they’re spending.
If we’re spending so much that from minute to minute, the budget is red or green, maybe we should reduce our spending and keep our spending in line to keep it always green. Basically, that would be very easy to do.
And the way to do that is to look at the last year. I mean, does the budget really have to increase by 10% every year? It used to be 5%, you know. Now it’s like 10%. Look at some departments — it’s 200%. When the budget first passed, some departments were increasing by over a thousand percent. That’s too much!
And so, we really need to reduce our spending and live within our means. Especially considering the future, the budget is really an estimate of how much money we think we’re going to bring in in the future. And the future right now is uncertain.
We’ve got … I don’t know if it’s a recession — some people say it’s a recession right now. We’ve got interest rates are rising as we go; you’ve got a war across the world; and you’ve got uncertainty in the stock market next year. So we should keep our spending low.
And the other part of that is, if we keep spending past the limit, it will never afford a tax cut for people. We’ll never be able to reduce the cost of living. And so, every dollar that you don’t spend is a dollar that could go back to taxpayers.
So that’s the metric that we need to balance the budget by — not whether it’s red or green, but by how much we could potentially give back to taxpayers.
Matsumoto: Absolutely. And we’ve sent out surveys, I mentioned, to my district every year, and I had several of my colleagues send out identical surveys. And when we talked about different tax cuts or different measures regarding putting money back into people’s pockets, 70% to 80% of the people wanted those bills, right?
I think that’s something interesting that I hope the rest of the colleagues, my colleagues, at the Legislature can see is this is what people really want, and what not just what they want — what people really need. So I think that’s something that’s really important.
And well, talking about my colleagues, there was a lot of things happening this year with transparency, and actually over the last few years. And so, I’m going to move us into last year, the Legislature set up the Foley commission to make recommendations to increase government transparency and accountability.
And this year, a few suggestions were adopted by the Legislature. Can you go through some of those?
Kefalas: Sure, sure. So, as you mentioned, there were a few recommendations that are now law. One of those bills is something that would prevent lawmakers and state employees from hiring family members. You know, things like hiring should usually be based on merit as opposed to who you’re related to — even though that can be tough here in Hawaii; it’s usually who do you know, who’s your uncle, who’s … But, you know, it was a good bill, and it’s a step forward.
But I also want to point out that there were a couple of bills that the Legislature left on the table this year. And these are bills that were good government-type bills.
The first would have lowered the fees for public records. That’s something that’s really near and dear to our hearts because at Grassroot, like we mentioned, we do a lot of government accountability work. And so when we try to put in an open records request to a government agency, there have been times where we’re hit with a fee in the six figures. And as much as we love transparency, there’s just no way that we can afford that. [laughs]
So, unfortunately, that bill died. We’re hoping, again, that we can bring that back to the table.
The other one that was big in my mind that got left on the table was restricting the use of campaign funds because, obviously, we should be holding our legislators accountable on that kind of thing.
And so, when you’re raising money — as I’m sure you well know, Rep. — it’s something that you have to be responsible for.
Kefalas: And so, for us, as a group that really likes to focus on government accountability, government transparency, in addition to all the host of other things we’ve talked about, seeing those bills die was a little disappointing.
Matsumoto: Absolutely. And I will say, I was encouraged that we actually heard these bills. I would argue that our Legislature was almost forced to with the amount of people that were indicted or have been getting in trouble.
So, it’s unfortunate to me that it took people going to prison in order for us to bring these things up. But it’s funny, we passed the bill — like you talked about, the nepotism bill — where you can’t hire your friends or family. But that didn’t apply to the Legislature, right?
Matsumoto: So, we would do things where it applies for all state government employees or get hiring — but not for us.
Kefalas: Well, it’s the same thing with sunshine laws.
Matsumoto: Yes, it applies to everybody but us.
Kefalas: Yeah, exactly.
Kent: And I wonder sometimes how feasible it is — how possible it is — to actually pass a law that would make the government good. I mean, you can make the government better, but who’s watching the watchdogs? And we have all kinds of laws to do that.
If you look at the bills that passed along these lines this year, a lot of them were focused on election law — campaign finance and everything. But where the questionable activity is happening in government is a lot of it is in the boards, the watchdogs. You know, the Honolulu Police Commission is one; the HART, Honolulu Authority for Rapid Transit, is another. These are commissions that are kicking off the watchers; the people who are rocking the boat.
We want people who rock the boat on those commissions. We want people who stand up and try to hold the system accountable on those commissions and authorities. But if it’s so easy to just get rid of anyone who’s dissenting, then the problems continue.
And that’s what’s happened, both with HART and with the Honolulu Police Commission, where we’ve had indictments and the police chief and his wife going to jail. I mean, this was something that the police commission was overseeing.
Now, how do you make a law to prevent that from happening? I don’t know. But certainly fixing the election law might help, but it might not.
So, you know, part of this is kind of looking at our practices as a community. And all of this says something about who we are as a state and as a community.
Matsumoto: Absolutely. And our Republican Caucus felt very strong about government reform. And so we introduced every single one of the recommendations from the Foley Commission this year.
But, I agree with you. After a lot of these things happened, we were forced to do more ethics training. It kind of made me laugh going, “This isn’t an ethics training issue. This is a morality issue, right?”
Matsumoto: It’s a lot of these things that people are getting in trouble for. It’s pretty black and white.
Kent: And the way I see that is if you have a very big and powerful government, it’s difficult to make it moral. The only way to do it is to limit government. So, that’s my solution.
Matsumoto: Absolutely. And I believe we have a caller on the line.
Caller 2: Yes, I’m from Waimanalo. And I watched with interest as the [Honolulu] City Council approved a 64% pay raise for several city officials — including the mayor — and several City Council members and even their staff. And, I wonder what your opinion is of that and the process even that they went through to approve the pay raise. Could you speak to that?
Kent: Yeah, absolutely. The pay raise is based supposedly on the assumption that the City Council members and the mayor are full-time staff. But if you look actually at what the law says, what the charter says, there’s nothing in there that says that they have to be busybodies. I didn’t tell them to be busybodies, you know?
And there’s no evidence to show that being a full-time Council member or mayor, being so involved in creating laws, actually improves our lives. In fact, a lot of the laws that they pass don’t necessarily make our lives better — sometimes, they make it worse. So, why should we pay someone more for spending so much time to potentially hinder progress in our business community?
Now, not to say anything about those particular individuals, but if you look at a Council member’s spot, it’s not necessarily true that they always do the most good for us. And so, I was skeptical about the pay raise from that sort of philosophical sense of: Are they really full-timers? Or yes, they act like full-timers, but maybe it’d be better if they were part-timers and we paid them more of a part-time salary.
Matsumoto: Yeah, there was a lot of discussion at neighborhood boards about this — sat through — I know I’m on the state legislative side, wasn’t really involved on the Council side. But 64% is a huge increase, and I see how it’s very difficult for the public to come to terms with that. And several of the Council members also didn’t agree with the raises and were very public about that.
Kefalas: Yeah, I think too, you know, not to say that they didn’t deserve any raise, right? I mean, we’re going through inflation, we have that kind of thing set up.
But it just seemed a little tone-deaf when you’re getting a 64% raise, and all the citizens are dealing with huge property tax bills. I think that hit everyone with a shock when those eventually dropped earlier this year.
So, when people saw that, and then they see the high salaries … I think also just looking around at the different infrastructure, and you see the parks aren’t necessarily well maintained, you see some of the roads are falling apart, and you look at it and you say, “Well, why aren’t we spending the money there? Where is all this money going?”
Kent: And if you look across the nation at the best-run cities, some of them have councils who are paid very little. I mean, I looked at Sandy Springs, Georgia, for example, which has a town that’s one of the most efficiently run towns. It has no unfunded liabilities; they run huge surpluses every year. In fact, they put it up to a vote to give the money back to the people, and the people said, “No, keep it. Put it back into our roads and bridges and everything.”
The council members in Sandy Springs get less than $30,000 a year, and I know that’s on the mainland, but even on the mainland, that’s a really small amount.
These are folks who are doing a part-time position. They work elsewhere in the community; that’s where they make their money, and they’re sort of entrepreneurs, business types. They’re well connected to what the community wants, and that runs really well there.
I don’t really see why we need to pay such lavish salaries. I don’t think we’re going to get the bang for the buck.
Matsumoto: Well, thank you. And thank you so much for calling in. OK.
Caller 2: Thank you very much for your time.
Matsumoto: Thank you.
So, we’ve been talking about cost of living a lot. What about housing? You know, the average price of a home is around a million dollars now, which is crazy. And everybody is talking about housing.
Tell me what your guys’ thoughts are.
Kefalas: Yeah. So, you know, this past session, we kind of talked about it a little bit earlier about the governor’s emergency proclamation. But earlier this past session, there was a lot of talk about getting rid of the red tape. And there were a few, kind of more manini bills that were passed this year.
For example, there was the state rent supplement program that’s specifically for qualified people that are 62 years old plus and are on the verge of homelessness. And I’m not saying that those people don’t need help and that we shouldn’t help them, but we can’t forget about the middle-class and people that are working two, three jobs just in order to stay here in Hawaii.
So, we mentioned the governor’s emergency proclamation, and I think we all kind of have mixed feelings about that. But I will say, I’m hopeful that at the end, there’s at least some more housing.
As somebody that’s looking to buy a house at some point in the near future, it’s something that’s a personal issue for me. And it’s something that I really want to see get done in the next few years because we don’t have that much more time to wait.
And even projects that get through the pipeline tomorrow are still going to take a lot of time to get through the building process and whatnot. So, we need to start figuring out solutions now.
Kent: And the governor’s emergency proclamation, like I said before, is a sandbox right now. It’s really problematic in the way it was done because we’ve never done this before. It begs the question about what else could be considered an emergency. It asks the question: How long can this be? Is this temporary? Is it permanent? And are we in a monarchy or a democracy?” And all kind of questions.
I could talk about that all day long. But the fact is, we are in a little sandbox now. And the laws have been lifted; all of the barriers, at least at the state level, some urging the counties have been lifted for certain housing projects. And it’ll be really interesting to see if that actually does net into more housing. If it does, then legislators should take that as a cue and turn some of those ideas into law.
Matsumoto: I was gonna say that’s gonna be interesting to see is if it is successful …
Matsumoto: … if then we actually do something to make a difference in the legislative session. My biggest fear is that it actually is successful, and then we do nothing to actually codify it into law.
Kent: Oh, that’s a good point.
Kefalas: Yeah that’s a good point.
Matsumoto: Which I’ve seen time and time again because, of course — politics. I’m curious how my other colleagues feel about all the emergency proclamations as well. So, I am very hopeful for this next session that maybe this is a step in the right direction. But I’m also maybe cautiously optimistic.
So, hoping that it’s very successful, and then at least there’s some proven track record for us to actually make some change because, in our caucus bill as well, we’ve pushed a lot of things to try and get more housing.
And especially, we talk, you talk about how the middle-class gets forgotten — that’s in so many different things, even in preschool, right?
Those in the middle-class, they don’t make enough in order to pay for it, but they make too much to qualify for any assistance. Very similar, they don’t make enough to get the down payment, but they make too much to qualify for any assistance.
Kefalas: Well, you mentioned it earlier, too, with tax credits. And tax credits are good, but it’s a lot of times, it’s much easier to just cut the rates altogether. Because then, you don’t have people applying for these tax credits and trying to figure out if they qualify and whatnot.
It’s so much easier if you just automatically get it; you don’t have to think about it. And I think all too often we try to focus on the tax credit aspect of things as opposed to just a full-on rate reduction.
Matsumoto: Absolutely, and that’s why our caucus introduced also a bill to — well, we did two — one, to just eliminate the income tax, right? We went for the big, bold suggestion.
But I mean, if we did that for the, you know, average household, that’s about 10 to 15 thousand dollars a year that’s back in your pocket. I mean, that’s not chump change. That is huge.
Kent: That’s right. Look at all of the people leaving Hawaii. The first thing they do is go to Google and see which states don’t have an income tax, right? Turns out there’s a lot of them. And of course, Hawaii has among the second highest income taxes in the nation, you know, as far as brackets go. And so, that would be a huge step in helping people stay in Hawaii.
Matsumoto: Absolutely. And I think that’s one of our biggest arguments is going … We hear at the Legislature day in and day out and how people are suffering. Everybody says the same thing: It’s too expensive. Priced out of paradise. But the “how” is where we’re getting stuck.
And I think one of my frustrations is: I’m open to different ideas. I think where I get frustrated is we haven’t even heard the bills on lowering the income tax or heard the bills on eliminating GET — the general excise tax — on food and medical services.
My plea, oftentimes, is going, “Just hear the bill so we can get the testimony back. If it’s not perfect now, that’s fine. But at least give the bill a chance.”
Kent: Well, if you’re not on our Instagram — Grassroot Hawaii — those people are hearing the bills because we’re talking about them. And we’re trying to talk about them in a fun way that, you can share, you know, with your family members or kids. And, you know, I’ve had former students that I taught when I was a music teacher contacting me now. They’re like college graduates now, and they’re like, “I love your videos. I learned so much!”
So, hopefully, if people even get involved in what we’re doing or what you’re doing — Lauren Matsumoto — at the Legislature, it really … The founder of the Grassroot Institute said, “Politicians are followers, really, less so than leaders, because they follow what the people want.” If the people don’t want this stuff, then they won’t go in that direction. So it’s really important, like you were saying before, to weigh in.
And so, one way to do that is to follow us on Instagram at Grassroot Hawaii or grassrootinstitute.org, where you can get on our newsletter. We have a newsletter of 40,000 people who get our stuff and broken down for them every week about what the state and counties are doing or where they’re raising taxes and everything. So, you can get on that list on our website. So, yeah.
Matsumoto: Yes, and I do both of those things.
Kent: Oh, great!
Matsumoto: And even as a legislator, it’s really helpful because there’s 4,000 bills that get introduced every year, and just the amount of information that we take in, I really appreciate how Grassroot Institute breaks it down very simply to understand, but you can also dig deeper if you want. You have all the research component that you talk about. That’s really, really, really helpful.
So, we’re getting down to the end of our show today, and so I just wanted to open it up: Are there any other issues that you are planning to address next session?
Kefalas: Yeah, I think, you know, without letting the cat out of the bag necessarily, I think …
Matsumoto: Be strategic.
Kefalas: Yeah, we want to use the momentum that we have built on this Interstate Medical Licensure Compact. We want to look at things like the nursing licensure compact, the physical therapy, physicians, EMS, audiologists — these are all things that have compacts throughout the country, and Hawaii is not taking advantage of that. So, we want to take the momentum, like I said, from last session and really try to push those.
And you know, we’ve been talking about it earlier, but how are we going to also take what the governor did in his emergency proclamation and make it permanent so that we can actually see some housing in the future.
Matsumoto: Awesome. And I really wanted to point out, something that we’re doing this year in the interim is we’re going to be bringing a listening tour. The Republican Caucus is going to be going around the islands, listening to the people of Hawaii.
So often, we have town halls, but this is going to be different. We’re coming out to listen to you in order to know what we’re going to introduce for the next session. Those top issues that are really important to you.
And so, that really concludes our episode of “Capitol Convo.” I want to thank my guests from the Grassroot Institute for joining us. And to our listeners for tuning in on your drive home.
“Capitol Convo” airs live every Monday, Wednesday and Friday from 5 to 6 p.m. on AM 690 and 94. 3 FM The Answer. Join us for our episode next Monday where we talk with Rep. [Gene] Ward.
We’re looking forward to having more “Capitol Convo” with you. Mahalo for joining us this evening and please be sure to check us out on Instagram as well as online and come to our listening tours. Mahalo for joining us.