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Thursday, December 01, 2016
Harbors Division Fee Hike designed to boost $77M OHA Slush Fund?
By Andrew Walden @ 11:48 PM :: 4010 Views :: Economy, OHA, Taxes, Cost of Living

by Andrew Walden

The State Department of Transportation Harbors Division is asking Governor Ige to approve a 55% hike in wharfage fees in three steps between January, 2017 and July, 2018.  This comes on top of 70% fee hikes between 2010 and 2014.  If approved by Ige, the fee hikes are projected to jack up shippers expenses from the current $93.6 million per year to $137.3 million. 

Because almost everything sold in Hawaii is imported, higher wharfage rates mean higher consumer costs and a more difficult business environment.  Michael Hansen, President of the Hawaii Shippers Council, asks: “Is there some structural problem here that people are not sharing with us?” 

Yes. 

The ‘structural problem’ in the State Harbors Division consists of payments to the State Office of Hawaiian Affairs (OHA) under terms of Act  178 of 2006.

According to the most recent State Auditor’s report, $12,684,000 went to OHA in FY2015—13.6% of total Harbors Division revenue.  This is up 110% from the $6,037,000 paid out to OHA in 2010.  According to the totals provided in the 2015 Auditor’s report (p56) plus earlier figures from a 2014 Auditor’s report on HIDOT Special Funds (pg 23), and a FY 2009 State Auditor’s report (p44), we can learn that Harbors has given OHA a total of $77,389,000 from FY2007 through FY2015.

Harbors Div Ceded Lands Payments

FY – Amount

  • 2007—$7,112,000
  • 2008—$7,112,000
  • 2009—$6,316,000
  • 2010—$6,037,000
  • 2011—$7,614,000
  • 2012—$9,029,000
  • 2013—$10,559,000
  • 2014—$10,926,000
  • 2015—$12,684,000
  • TOTAL--$77,389,000

OHA is not mentioned anywhere in the Harbors Division sales pitch for wharfage fee hikes. 

The formula mandated by Act 178 of 2006 (implemented by Executive Order 06-06) directs $15,100,000 be transferred to OHA annually.  State agencies that collect receipts from the Ceded Lands to annually transfer 20% to OHA.  Until recently, their totals were less than $15,100,000 and the difference was made up from the General Fund.  Now the totals are in excess of $15,100,000 and OHA complains it has been obligated to return $8M that it could have used to lobby for the fake Indian Tribe.  That excess is held in a “Ceded Lands Trust Fund” managed by the Department of Budget and Finance.

According to DLNR, in 2015, departments transferred $18.8M—$15.1M to OHA and the rest to the B&F trust fund. The breakdown is:

  • $12.7M from Harbors – 68%
  • $4.4M from DLNR – 23%
  • The remaining 9% comes mostly from UH, DBEDT, Department of Agriculture, and the DOE. 
  • HHSC has been smart enough to avoid reporting any ceded lands revenues, lest OHA loot bankrupt public hospitals to pay for more OHA executive junkets to New Zealand or the Cook Islands. 
  • HIDOT Airports Division is shielded from OHA’s money grab by a federal law which prohibits the use of airport revenues purposes other than airport operations.

The 20% OHA transfer has been triple-transmogrified.

Firstly, the Harbors collections (and collections from DLNR DOBOR marina operations) are justified by the 1990 Hawaii Supreme Court decision in Napeahi vs Paty which holds that submerged lands are ceded lands.  Hawaii’s commercial and recreational harbors are all State-owned and most are built up on landfill above lands which were previously submerged.   OHA did not pay for any of the capital improvements to Hawaii’s harbors (OHA makes capital improvements more expensive for everybody) but is receiving far more than 20% of the revenues attributable to the value of the underlying submerged lands.  OHA also contributes nothing to Harbors Division operating expenses.

The 20% transfer is then twice-mutated from the five purposes for revenue from the Ceded Lands identified in the Hawaii Admission Act:

  1. for the support of the public schools and other public educational institutions,
  2. for the betterment of the conditions of native Hawaiians, as defined in the Hawaiian Homes Commission Act, 1920, as amended,
  3. for the development of farm and home ownership on as widespread a basis as possible
  4. for the making of public improvements, and
  5. for the provision of lands for public use.

The akamai reader will note that ‘five purposes’ does not equate to ‘20% each’ -- and “the betterment of the conditions of native Hawaiians, as defined in the Hawaiian Homes Commission Act” does not equate to “the worsement of the conditions of toenail Hawaiians as defined by OHA”. 

According to the text of Act 178 the Hawaii Supreme Court [OHA v Yamasaki (1987) and OHA v Hawaii (2001)] ruled:

“…the issue of what constitutes the Office of Hawaiian Affairs' pro rata portion of all the revenues derived from the public land trust … is a political question for the legislature to determine….” 

What was the political decision?  Act 178 orders DLNR to prepare an annual  “accounting of all receipts from (ceded) lands…” including “the total gross amount” and “the amount transferred to the Office of Hawaiian Affairs.”

Pushing its 2016 Legislative Package, a statement posted on OHA’s website argues:

…While state law requires that OHA expend 20% of all funds derived from the trust, for decades OHA and the state disagreed on how to calculate OHA’s 20% share.

Most recently in 2006, OHA and the state agreed on Act 178 as an interim resolution and established OHA’s temporary annual share at $15.1 million “until the further action is taken by the legislature.” Importantly, the Legislature included a provision for reporting from state agencies on proceeds and revenues, and this data can now be used to compute OHA’s 20% share.

According to the state’s own reports, the state generated an average of $158,077,656 annually in Public Land Trust revenues in the last 3 fiscal years, 20% of which is $31,615,531, more than twice $15.1 million. Moreover, the state’s transfers to OHA, which are calculated using historically undisputed revenue streams, have exceeded the $15.1 million cap in each fiscal year since 2013.  As a result, OHA has returned approximately $8 million to the state….

The text of Act 178 states: “Nothing in this Act shall resolve or settle, or be deemed to acknowledge the existence of, the claims of native Hawaiians to the income and proceeds of a pro rata portion of the public land trust….”

HB1434, lifting OHA’s ceded lands cap, was ignored by the 2016 Legislature.  Is the Harbors Division Fee Hike secretly part of a deal to expand OHA funding in the 2017 Legislative session?

---30---

Jan 2016: Crabbe: Plan is to Take Control of Hawaii’s Entire Economy and Hide Behind Tribal Jurisdiction

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