A Policy Statement About Fines

by Tom Yamachika, President, Tax Foundation Hawaii

This week we are taking up as a new and noteworthy development Bill 17 being considered by the Honolulu City Council.

That bill would give the city’s Department of Planning and Permitting a clear pathway to enforcing fines that the Department imposed by allowing the Department to record liens against the property that the fines concern, and then to foreclose on the liens like a mortgage company would if a mortgage was in default.

Except that the Department doesn’t really want to do that stuff.

Department Director Uchida was recently quoted in the Star-Advertiser. “The problem is to go the next step to put a lien on the property and actually foreclose, you got to go to the court system,” he said. “[Corporation] Counsel is understaffed, we’re understaffed, so everything gets bogged down there.”

The Department has the authority under current law to slap liens on property and foreclose them. Yet, some properties have unpaid fines totaling more than $150,000, or fines that have remained unpaid for more than five years.

If the Department has been acting like a toothless tiger all this time although it certainly had the teeth, why do lawmakers think that this bill is going to cause any significant change?

“The purpose of Bill 17 is to make a policy statement that you need to address noncompliance with the housing code, specifically public nuisances, and that at a certain point the department must act,” said Tommy Waters, council chair and introducer of Bill 17.

But it seems that the problem might not be something this bill can solve.

If a CEO of a normal company told the Board of Directors that the staff were too busy to collect unpaid money that its customers owed, and that the unpaid receivables on occasion exceeded $150,000 per customer or were outstanding for five years or more, that CEO wouldn’t have that job for much longer.

Even if the CEO was a really talented subject matter expert, there are just some basic competencies that just have to be there so that the business can survive. The same is true even in government. The basic competencies need to be there, although perhaps for different reasons. Here, we want our agencies to deter bad behavior by enforcing fines and penalties. If it were well known that penalties weren’t being enforced, there’s a good chance that bad actors would ignore the penalties, continue to act badly, and maybe encourage others to do the same. Lawmakers sometimes overlook these basic facts.

To solve the problem here, there needs to be a change in the underlying mentality. Enacting a bill as a “policy statement” can’t be expected to accomplish much. Something else needs to be done.

Perhaps the Council should consider requiring the Department to turn over its seriously unpaid fine cases to its property tax collectors. Those folks record liens and do foreclosure suits all the time and don’t complain about doing them. By the way, current law already allows the fines to be added to other debts the taxpayer might owe, including property taxes, so it would not be a serious crimp in the system to have the Department fork them over to the property tax folks.

Save the policy statements for the campaign trail – if we want to go forward with this, we need thoughtful action.