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Saturday, February 3, 2018
SB2136: Ige Administration Opposes OHA's $119M Cash Grab
By Andrew Walden @ 2:11 AM :: 8203 Views :: Ethics, Hawaii State Government, Health Care, Higher Education, OHA

by Andrew Walden

Grabbing for a $119M cash payout and a doubling of annual State ‘ceded lands’ payments, the Office of Hawaiian Affairs is pushing SB2136 and its companion, HB1747. 

But Ige Administration and University of Hawaii testimony in opposition to the bills exposes the degree to which OHA rent-seeking is driving up hospital bills, public housing rents, and University of Hawaii tuition for everybody—including native Hawaiians.

Ironically, the two bills are being heard in the wake of the leaked ‘draft audit’ of OHA which exposes yet again the deep corruption at all levels of OHA operations.

Here are some key excerpts from the testimony:

Attorney General on SB2136

…the Supreme Court in OHA v. State, 96 Hawaiʻi 388, 401, 31 P.3d 901, 914 (2001)(“OHA I”), held that only the Legislature can establish what OHA’s share of the income and proceeds is, because that decision requires “policy determinations” that only the Legislature can make: …

OHA’s position and the amount of the share of the public land trust receipts it asks for, appears to be based on a calculus that applies 20 percent to all receipts that are collected from the use of all of those lands, although it is not yet clear whether this total does, or does not include patient services revenues collected by the Hawaii Health System Corporation or the State’s two housing agencies. Because OHA’s request would increase its share by more than 100 percent and has to impact the rents, fees, and charges that state agencies currently collect, it should be subjected to close scrutiny. …

  *   *   *   *   *

UH System Legislative Testimony

by Kalbert K. Young Vice President for Budget and Finance/Chief Financial Officer University of Hawai‘i System

…UH is concerned that the term “receipts” is not clearly defined or appropriately limited by SB 2136 as currently drafted, and may be construed to include UH funds such as student tuition and fees that are currently, and properly, excluded from the computation of amounts due from UH toward OHA’s pro rata share of the public land trust. The term “receipts” may also imply gross receipts as opposed to net receipts thereby jeopardizing the financial stability of campus bookstores.

UH, as a public institution of higher education and also a beneficiary of the Public Land Trust, serves one of the express purposes, and in fact the first-mentioned purpose of the Public Land Trust established by the Admission Act. Under current law, as interpreted and applied by the Office of the Attorney General, receipts from the University’s educational programs and ancillary services are not subject to apportionment to OHA. Such receipts include student tuition and fees, services of educational departments, and student housing. The University also receives federal and other research grants and contracts, federal reimbursements of UH research overhead expenses, philanthropic gifts, and other funding streams, in addition to the support provided by the Legislature.

Currently, in accordance with past discussions with the Office of the Attorney General, OHA has been determined to be entitled to a pro rata share of specific types of University revenues as described in Conference Committee Report No. 101 to SB No. 2948, which became Act 178, SLH 2006. Those revenue sources are: UH Mānoa and UH Hilo parking, faculty housing, non-student housing rentals, including food and vending machines, telephone commissions/collections, and UH Hilo Bookstore logo products, sundries but not books or school supply items. UH acknowledges and accepts its obligation to pay over OHA’s allocated share of those items. However, given recent positions taken by OHA, the University is deeply concerned that the use of the undefined term “receipts” in SB 2136 could lead to claims that other types of University funds are also subject to OHA’s pro rata share, leading to potentially complex and costly disputes and unforeseeable and unmanageable financial impacts to the university, students, and taxpayers relating to all State services…

  *   *   *   *   *

DLNR Testimony on HB1747

House Bill 1747 proposes to: 1) establish $35,000,000 as the Office of Hawaiian Affairs’ (OHA) pro rata share of the public land trust, 2) transfer $119,000,000 less certain funds to OHA for underpayment of the public land trust funds from July 1, 2012 to June 30, 2018, 3) requires the Department of Land and Natural Resources to provide an annual accounting of receipts from lands described in section 5(f) of the Admissions Act, and 4) establishes a committee to recommend the annual amount of the income and proceeds from the public land trust that OHA receives annually. The Department of Land and Natural Resources (Department) opposes the bill because of the financial impact on the Department….

If this measure were to become law, at current revenue levels the Department and other agencies working to generate revenues for the State (in lieu of tax revenues from the general fund) from ceded lands must come up with an additional $15 to 20 million annually. For reference, in fiscal year 2017, the Land Division collected approximately $12 million in total revenue. While the Department understands that it will not be solely responsible to cover the payment of the additional revenues, the bill does not specifically allocate payment obligations among the respective agencies. Therefore, such a severe increase in annual payments to OHA from $15.1 million to $35 million per year may impose a devastating financial burden upon the Department and its natural, recreational and historical resource protection programs.

The revenues collected by the Land Division cover the entire annual operating budget for the Land Division, the Office of Conservation and Coastal Lands, the Dam Safety program, and the Geothermal program. The revenues also fund other positions within the Department such as five (5) positions within the Commission on Water Resource Management, and provide funding support to the Division of State Parks and various resource protection programs administered by the Division of Forestry and Wildlife such as the protection of threatened and endangered species, removal of invasive species, wildland firefighting and lifeguard services….

  *   *   *   *   *

Department of Transportation opposes this measure

The Department of Transportation, through its Harbors Division, contributed $13.5 million of the $15.1 million transferred from the State to OHA in Fiscal Year 2017. The Harbors Division is a completely self-funded enterprise and contributes the largest portion, about 90%, to the public land trust revenues OHA receives and annually honors its obligation to transfer the appropriate sums owed. However, the Department of Transportation opposes this legislation because it is yet another temporary measure that defers permanent resolution; it does not clarify the language in the Constitution of the State of Hawaii and the Hawaii Revised Statutes to address the long-standing political question of how to appropriately calculate the pro rata share.

Further, the impact of the interim measure on the financial projections of the self-funded Harbors Division is unknown and has not been calculated. This bill will not only jeopardize the Harbors Division and the ongoing Harbors Modernization Plan, but will impact the State of Hawaii as a whole.

  *   *   *   *   *

Common Cause

…we are concerned that the public land trust committee, created by this bill, will not be subject to our Sunshine Laws. As OIP states on its website, the law is “intended to open up governmental processes to public scrutiny and participation by requiring government business to be conducted as transparently as possible.”1 We do not understand the reasoning for this exemption as it would curtail public participation, and urge you to subject this committee to the Sunshine Law (HRS Ch 92). …

  *   *   *   *   *

League of Women Voters

…we request amendment of SB 2136 so that the proposed public lands trust revenue committee is subject to Chapter 92, Hawaii Revised Statutes. There is no compelling justification to exempt the proposed committee from the Sunshine Law. …

  *   *   *   *   *

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