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An amazing day at the Capitol
By Keli'i Akina PhD @ 9:04 PM :: 2859 Views :: Development, Small Business, Taxes

An amazing day at the Capitol

by Keli'i Akina, Ph.D., Grassroot Institute, April 28, 2023

Yesterday was an amazing day at the state Capitol.

After four months of hashing out the fate of more than 4,000 bills that were introduced in the 2023 Legislature, it finally became clear which big-ticket items were going to make it to the governor’s desk for signing — or hit the cutting room floor.

And the amazing part? Our legislators approved significant reforms that could lower the cost of living, increase housing availability, improve the business climate, enhance healthcare services, reduce unnecessary expenses and allow us to keep more of our own money.

And all at the last minute too!

According to my colleague Ted Kefalas, Grassroot Institute of Hawaii director of strategic campaigns, many of the bills were passed in less than two hours in a standing-room-only conference room. He said some legislators had to scurry around the building to find voting colleagues before the 6 p.m. “decking” deadline.

Often, the conference committees are where many excellent bills go to die, due to the lack of transparency that surrounds these proceedings. But this year, the winds of change blew favorably for Hawaii residents, especially regarding the following bills:

>> SB674, which if signed by the governor will authorize the state to join the Interstate Medical Licensure Compact and make it easier for doctors from other states to practice here. There are no guarantees, but judging by the experiences of other states that belong to the compact, this measure will likely go a long way toward alleviating the state’s acute doctor shortage, currently estimated at almost 800 doctors.

>> HB676, which if enacted will allow government housing projects under 100 acres to skip the state Land Use Commission process and be approved instead at the county level. This bill would have been better if lawmakers had not removed private-sector housing projects from its provisions at the last second, but it’s still a step forward. Looking ahead, I urge lawmakers to view this as a pilot program and consider expanding it to private-sector housing.

>> SB1437, which if signed by the governor could save Hawaii businesses millions of dollars in federal taxes by allowing pass-through entities such as S corporations, partnerships and LLCs to pay Hawaii income tax at the entity level. This has the potential to improve Hawaii’s business climate at no cost to the state.

>> HB954, which is part of Gov. Josh Green’s much-touted three-part “Green Affordability Plan.” If enacted — and I’m pretty sure the governor is going to sign it — the bill will provide tax credits of about $125 million annually, mainly by increasing the earned income tax credit, a tax credit for low-income renters, the food excise tax credit and a child and dependent care credit.

Unfortunately, the bill no longer indexes the state’s income tax to inflation or increases its standard deduction and personal exemption. Those measures combined would have saved Hawaii taxpayers an additional $194 million a year and protected them from tax increases far into the future. But it will nonetheless put more tax dollars back in the pockets of Hawaii residents.

So those are some of the bills that I am happy to see were approved. On the flip side, it’s also wonderful that certain bills died. Among them:

>> SB304, which would’ve created a $50 visitor impact or “green” fee to be paid by all tourists 15 years or older wishing to visit a state park, forest, hiking trail or other state natural area. As the Grassroot Institute repeatedly pointed out, this proposal was impractical and probably unconstitutional, and it’s a victory for Hawaii that it was ultimately jettisoned.

>> HB1375, which would have effectively funded the Hawaii Tourism Authority for another year. Pending creation of a possible “Frankenbill” — in which HTA’s funding is somehow restored — the bill’s death leaves the HTA with no funding either in the already-passed state budget bill or in a separate bill that some lawmakers had been pinning their hopes on.

This astounding development doesn’t quite mark the end of the HTA, which still has some funds in its reserves to limp along until the next legislative session. But it’s about time lawmakers cut government involvement in tourism marketing, especially since the private sector already spends millions of dollars marketing Hawaii to the world — and probably more efficiently than the HTA.

But what about the lowlights? Those include the approvals of:

>> SB1057, which if signed into law will require certain businesses with 50 or more employees to disclose their hourly rates or salary ranges on job postings. This meddlesome measure could have many negative consequences, as I mentioned in my email to you last week.

>> SB945 and HB525, both of which, if enacted, will grant the state broad powers to restrict the cryptocurrency market, to the detriment of individual liberty and entrepreneurship.

Another lowlight concerns bills that were rejected, including several that would have exempted groceries, over-the-counter medicine and medical services from the state general excise tax. My colleagues and I at the Grassroot Institute campaigned vigorously for all of these, but not enough legislators were convinced of their merits — yet.

We plan to campaign for these ideas again next year. But for now, I would like to express my gratitude to the lawmakers, experts and advocates who contributed to the positive developments that have taken place at the Capitol so far this year.

I am also thankful to you, the readers of my weekly columns, who weighed in on many of the bills mentioned above. Your involvement is helping Hawaii become a better place to live.

  *   *   *   *   *

News Release

from Grassroot Institute, May 2, 2023

Here are a few brief comments from Keli’i Akina, president and CEO of the Grassroot Institute of Hawaii, regarding some of the bills that were approved today by the 2023 Hawaii State Legislature.
>> On the governor’s tax package,
HB954:

I'm glad the Legislature has passed a few pieces of Gov. Josh Green’s “Green Affordability Plan.” Unfortunately, the broader-based tax-relief measures in the plan were removed at the last minute, leaving us with just a handful of tax credits that are slated to expire in five years. These measures might provide a modicum of tax relief, but next year the Legislature should enact bolder tax reform for the benefit of all.

>> On the “pass-through entity” bill, SB1437:

SB1437 would reduce taxation on Hawaii businesses at no cost to the state. It is a welcome bill, especially since Hawaii is consistently ranked as one of the worst states for businesses. 

>> On the "employee earnings" bill, SB1057:

This bill ostensibly is about transparency, but its practical effect would be to create logistical hurdles for Hawaii’s private employers and hinder their ability to negotiate with job applicants. In addition, if signed by the governor, it also has the potential to harm local businesses by elevating salaries over benefits and community considerations.

>> On the Uniform Commercial Code bill, applicable to cryptocurrency, HB525

The technical and confusing language of this 197-page tome is fraught with problems, not the least of which is a provision that could have grave consequences for the future of digital currency and business innovation. Specifically, it would exclude certain cryptocurrencies from the definition of “money” — a distinction not in step with the modern economy.

>> On the new employer tax to go toward a proposed Unemployment Insurance Technology Special Fund, SB1383:

Hawaii businesses are already paying more in unemployment taxes this year, and this bill would just make things worse. Plain and simple, it’s a tax hike that employers in Hawaii can ill afford. It should be shelved permanently.

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