Hill ‘more positive than negative’ about 2025 Legislature’s performance

from Grassroot Institute

Hawaii’s state legislative session this year produced real, positive reform, earning the Legislature an overall grade of B from Malia Hill, policy director for the Grassroot Institute of Hawaii.

Speaking this past Sunday with host Johnny Miro on the H. Hawaii Media radio network, Hill said “it’s hard to give [state lawmakers] a great grade. It’s a mixed bag. It almost always is. But I’m more positive than negative this year.”

In particular, she said, “they made some really good moves when it comes to housing. They passed HB422, which will substantially reduce school impact fees and create exemptions for certain kinds of [housing] projects. And then they also passed bills that will reform historic [property] review.”

Miro responded: “It’s good to see that they passed that to make it a little bit easier on folks that want to build or add on with an ADU [accessory dwelling unit]. So great news there.”

Hill said a pleasant surprise was the passage of HB126, which if approved by the governor will make it harder for the state to seize property from people not convicted of a crime. She said the bill isn’t perfect, “but it’s does improve the transparency and accountability.”

On the flipside, Hill expressed disappointment that bills to restore constitutional balance to Hawaii’s emergency powers law “made it all the way up to conference … and then just kind of failed in conference.”

Miro wrapped up by asking Hill what the Grassroot Institute of Hawaii would like Gov. Josh Green sign or veto.

“At the end of the session, I usually have a list — a long list — of vetoes, but no, this time I have a long list of signs,” Hill responded. “I want him to sign the historic review bills, the impact fee bill, the permit bill.”

TRANSCRIPT

Johnny Miro: Good Sunday morning to you, I’m Johnny Miro. 

Once again, it’s time for our H. Hawaii Media family of radio stations public access programming. Our five Oahu radio stations, five on Kauai, five on Maui. Hawaiistream.FM, live 365, another way to pick us up via the interweb, if you’re out and about away from the terrestrial radio.

Well, what was right or wrong at the 2025 state Legislature? It just wrapped up. It’s over. The hearings are done. The gavel is sounded. It’s complete. We’re still trying to find out what to make of it all, of course. 

Joining me today to discuss this is Malia Hill, director of policy at Grassroot Institute of Hawaii. Of course, Grassroot Institute is a nonpartisan public policy think tank. They’re based in downtown Honolulu. And Malia is responsible for tracking these key bills as they move through the Legislature and submitting testimony. 

And today, Malia is going to talk a little bit about, break down some of the biggest successes and disappointments of the 2025 legislative session. So good morning to you, Malia, and thanks for joining me.

Malia Hill: Oh, thank you so much. I’m glad to be here.

Miro: All right. Malia, if you had to sum up this year’s session, how would you do it? Would you give the Legislature a good grade for the year overall?

Hill: Well, I mean, it’s hard to give them a great grade. It’s a mixed bag. It almost always is. But I’m more positive than negative this year.

You know, at the start of the session, we were worried that maybe there’d be an attempt to roll back income tax cuts or the reforms to ADUs [accessory dwelling units], but that didn’t happen. And in some areas, there’s actually real, positive reform efforts, especially when it came to regulations regarding housing.

So I’m going to give them a relatively good grade for the year. Not an A-plus, but, you know, solid grade. They didn’t take their GPA. Maybe a B?

Miro: All right. I know the Grassroot Institute was heavily focused on housing reform this year, as we all are for the most part. But how did your key housing bills fare?

Hill: Well, you know, this is where, you know, the Legislature gets its highest marks from me. They made some really good moves when it comes to housing.

They passed HB422, which will substantially reduce school impact fees and create exemptions for certain kinds of projects. We did a whole brief about this. Basically, school impact fees add thousands [of dollars] to the cost of a home, even an ADU.

We have a whole story about a family in Kahului who are trying to build an ADU, and they got hit with $5,000 in school impact fees. And yet, they don’t build anything with these fees that they collect. So, you know, that, I think, is a really good thing.

And then they also pass bills that will reform historic review. 

If you’re not familiar with that, we were kind of in the situation where anything that was 50 years old — well, not everything — but most historic property that were peaking 50 years old, that would trigger historic review. And I don’t know about you, but like, I don’t think merely being 50 makes you a monument of historic importance.

So, you know, there’s two bills. SB15 will redefine historic property. So it takes more than just hitting the 50th birthday. There’s other criteria involved. And then HB830 will streamline the process. The whole historic review thing takes long, takes longer, adds to the cost of the delay in housing. So this will help as well.

Miro: And back to the school impact fee. It’s like millions of dollars and really nothing’s been built with all that money. And it’s good to see that they passed that to make it a little bit easier on folks that want to, you know, build or add on with an ADU. So great news there.

Hill: Yeah, that was really good news.

Miro: Yeah. Grassroot testifies in a lot of bills and most of which get stalled somewhere in the session. Were there any surprise victories for you this year, Malia?

Hill: Yeah. There were a few things that got through that we weren’t expecting and we’re very happy about. There’s HB126. That’s civil asset forfeiture, which is when the government can seize and sell off someone’s property when they’re accused of a crime. It sounds okay in theory, but it’s actually notorious for, you know, kind of catching up innocent people. And then the lack of transparency in what happens to the funds.

And so the bill that passed, it’s not perfect, you know. It’s again, most likely, I could give it maybe a B or a C. But it does improve the transparency and accountability. And it at least limits, you know, the people who can be targeted off at forfeiture to property that can be targeted by asset forfeiture to when someone’s actually been charged of the crime. So that’s a start.

SB1065, it seems like a little thing, but it eliminates the requirement of having a bachelor’s degree if you want to be employed by the state or county, with certain exemptions.

 So it’s basically saying, “Hey, skill is enough,” which I mean, shouldn’t it have been all this time? It’s really good. It’ll help them fill vacancies, but I think it’s also just a commonsense thing and good that they actually put it through.

Miro: Yeah. That kind of slid under the radar. Great news right here, as they got a lot of vacancies to fill.

Malia, one of the big frustrations when it comes to housing and renovation of the permit delays, did the Legislature make any progress in reducing those delays?

Hill: I actually have great news here. This is going to be great for anyone who is just at their wits’ end on permits. So the Legislature passed SB66. And what it does is it creates this special expedited process for applicants with single-family or multifamily housing projects to get their permits. 

Basically, what happens is you apply for your permit, and in a perfect world, you get it approved in 60 days, and it never even becomes an issue. However, if you hit that 60-day mark and your permit still hasn’t been approved, you are now eligible for an expedited permit. 

And this means you have to make sure your permit application is complete — different counties have slightly different definitions of that. But, you know, all the paperwork is done, you have all your documentation, everything you need for the permit to be complete.

You get a certification from a licensed professional, and then you just agree to waive any kind of liability claim against the county and state. You do all that, and your permit is approved, and you can just start.

So ideally, this will bring down review time periods, and they won’t have to use it very often. It does kind of give this release valve. At 60 days, you know, you basically can just put things in action and start your construction.

Miro: Well, that’s great news. Grassrootinstitute.org is the website, right? Grassrootinstitute.org, and they have a “Take Action” tab, and a lot of people are involved with that to read over some legislation. You could take action once you get informed on some of these issues. And that’s why a lot of these things that Malia is referring to, she has positive news about that. So grassrootinstitute.org to get informed and take action on some really important bills.

Last year, we were able to celebrate the largest tax cut in state history. I remember that very fondly. My paycheck definitely reveals that. What happened with taxation in this session? Any reason to celebrate, Malia?

Hill: Well, I mean, if nothing else, celebrate the fact that that paycheck is still reflecting that tax cut because, you know, early on in the season, there were people who wanted to roll back that tax cut, but it didn’t happen. So, just keeping it is its own reason to celebrate. 

But they also defeated some other tax hikes — the capital gains tax hike. There was an effort to raise the unemployment tax rate, and that died this year.

There was one major tax that was successful. That’s the “green fee” bill, SB1396. The final version ends up raising the TAT to 11%, and they send it to cruise ships. And it’s a little disappointing to see because tourists aren’t the only ones who pay the TAT, and they’re definitely not the only ones affected because it kind of has an effect on the whole economy.

Miro: Joining me from Grassroot Institute of Hawaii, Malia Hill. What about the disappointments? Were there any bills you hoped to see pass that stumbled at the finish line?

Hill: Yeah, there are a couple minor disappointments. Emergency powers reform. There were two bills that made it all the way up to conference on that and then just kind of failed in conference. And they would’ve helped restore the constitutional balance of powers and the way that the governors and mayors are able to exercise their emergency powers.

Now, I know it’s strange because that often works in favor of the things we like. The governor’s been really good about using those powers to get rid of, you know, regulations and things that stall out housing. So, it’s sort of a mixed bag, but if you just want to be super principled about it, I think we really need a legislative check on executive power, even if it’s inconvenient. So I was disappointed that that bill stumbled.

And I was also disappointed that the right-to-walk bill just can’t seem to make it through a session all the way.

And then there’s the Lahaina SMA [Special Management Area] exemption bill. Now it did pass, and that is actually a really good thing. They’re codifying the SMA exemptions that the governor put in his Lahaina order so that people can rebuild.

And that’s good. I’m happy that it passed, but the people on the shoreline got cut out of it at the last minute, and that was a little disappointing. It would’ve been nice if they had extended the bill to shoreline properties, and everyone got the equal opportunity to rebuild. 

Still a good bill, but it could have been better.

Miro: Is that the one where they have to move even though, you know, pre-8/8/23, they have to build back further away from the shoreline?

Hill: Basically, what would have happened is that everyone — you know, if your home is destroyed in a natural disaster — you can rebuild on the same footprint. You basically rebuild what you had. And it still does that; it’s just not for the people in the shoreline setback.

Miro: OK, Malia, looking ahead, what do you think Gov. Josh Green will do? What would you like to see him sign or veto when all is said and done?

Hill: I’m feeling very positive about a lot of the bills that went through. And so most of the, you know, my requests are, you know, sign, sign, sign. At the end of the session, I usually have a list, a long list of vetoes, but no, this time I have a long list of signs. 

I want him to sign the historic review bills, the impact fee bill, the permit bill. There’s another bill, HB1409, that supports transit-oriented development. That got through. We’d love to see him sign that. 

Obviously, the Lahaina bills, SB1296, and there’s another one that increases the valuation threshold to $750,000 for SMA minor permits, another of these Lahaina rebuild bills. I’d like to see him sign both of those.

Obviously, the asset forfeiture, the degree requirements; there’s a bill that’s about the scope of practice for pharmacists getting reimbursed. That would be great to see him sign. Lots of really good bills here that we want him to sign. 

Honestly, the only veto is probably the hardest sell. I would wish he would veto the TAT hike. I know that this is his signature topic. He’s, you know, been a big proponent of a green fee, but if I could just talk to him, I would tell him like, “This is not the same bill that you started out with. And it’s not the same situation that it was even a few months ago.”

You know, we’re looking at an uncertain economy. Some people are even whispering about recession. We’re still trying to rebuild tourism. It’s not really a good time. I mean, I’ve never, in fairness, I will never say, “It’s a great time to hike tourists.” But it’s especially to hike tourist taxes. But it’s an especially bad time to hike tourism taxes. And so I wish he would consider vetoing that.

Miro: And it sounded like the cruise industry would push back with some sort of a lawsuit. They don’t feel it’s constitutional, from their standpoint, that something like that would be put on them, placed on them. What would the increase be on the cruise industry? Percentage?

Hill: Yeah. It gets a little complicated because it’s based on, you know, number of days in port, and so there’s this whole … it’s like a math problem. [chuckles] But, you know, fundamentally, you know, it’s 11%. And I have heard … it said that the cruise industry would, you know, press back with a lawsuit. I’m going to assume that they believe that they found a way around that, but that doesn’t make them right. [chuckles] So it would be another good reason for the governor to say, “Hey, maybe we just try this again. Let’s just try it again next year. Maybe this is not the bill.”

Miro: And the average in a tourist coming in would be going from 8.25% to 9% if he signs this?

Hill: Actually, the way that the TAT works is funny because we have the base rate, which is 9.25%.

Miro: OK.

Hill: And it’ll go to 10%, but then there’s another 1% point on top of that, which we did a long time ago to help bail out the rail. So, it’s really 11%. We’re going from 10.25% to 11%.

Miro: Wow. All right, Malia, thanks for all the information on the 2025 state Legislature. It wrapped up the session. We’ll see what the governor does as far as sign or veto. 

And how can folks follow you as far as some of your writings? Obviously, grassrootinstitute.org. Very, very busy these days. I see some of the work you’ve done, and other people can join in on that. How can they find you?

Hill: Go to our website, grassrootinstitute.org. You’ll find testimony on these bills, commentary on these bills. You can see what events are coming up. We’ll be doing legislative wrap-ups on multiple islands, so you can go check that out as well. A lot of good information there, and the reports that, you know, back up some of our work.

Miro: All right, folks, that’s Malia Hill from Grassroot Institute of Hawaii. Malia, thanks for joining us once again, all that great information, and enjoy the rest of your Sunday. We’ll talk to you again soon.

Hill: Thank you.