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Friday, April 8, 2022
Hawaii Legislative Session: The Good, The Bad, and The Ugly
By Grassroot Institute @ 6:16 PM :: 1078 Views :: Hawaii State Government, Taxes

Legislative session nears end and so far it’s not totally terrible

from Grassroot Institute of Hawaii, April 7, 2022

Numerous bills aimed at increasing our taxes have been shelved, and some good measures actually have a chance of passing

The end of this year’s Hawaii legislative session is approaching, and we now have a better picture of where this year’s high-priority bills may be headed.

Of course, a lot can happen in the next month, so we won’t know how it all will really end until it really does. But for now, the good news is that most of the worst tax bills are on the cutting-room floor.

Those include HB2278 the so-called “carbon tax” that would have created a refundable income-tax credit in an attempt to offset a massive increase in the tax on petroleum products and fossil fuels, as well as HB1507, which would have increased the capital gains tax to be taxed at the highest marginal rate applicable to an individual’s tax bracket and increased the tax for joint taxpayers that make more than $48,000 annually and single filers that make as little as $24,000 a year.

Another bill we are happy to see be shelved was SB3261, aka the ALOHA homes bill. This fundamentally flawed proposal would have created an expensive, non-sustainable government construction program to build and sell “affordable” housing, in the form of 99-year leases.

Among bills still in contention:

>> Emergency powers

HB1585 appears to have stalled, but SB3089 contains the same provisions requiring justification for the suspension of laws and allowing the Legislature to terminate an emergency by a two-thirds vote. It also would prohibit the governor from suspending open-records requests during an emergency.

SB3089 passed its last House committee at the end of March and will likely go to conference committee. Ideally, the Legislature will arrive at a workable compromise bill that can be sent to the governor for his signature.

>> Zoning and land use

The Yes-In-My-Backyard bill, HB1837, which would require the counties to report on efforts to remove zoning and other regulatory barriers to housing, has passed the Senate Ways and Means Committee.

Assuming it is approved by the full Senate, it will go either to conference committee, then, we hope, on to the governor for a signature — or, if the House agrees with the Senate’s amendments, straight to the governor.

Likewise, SB2922, which would allow for quarter-acre lots in rural districts and commission a study on reclassifying agricultural land to rural, has passed its last House committee and is also poised to go to conference committee.

>> Minimum wage

The Senate’s minimum-wage bill, SB2018, stalled in committee after crossover. However, HB2510 has passed the Senate Ways and Means Committee and is likely to head to conference committee. Senate amendments have compressed the bill’s timetable, which now would impose an $18-an-hour minimum wage by 2026 while eliminating the tip credit entirely over the same period.

>> Cryptocurrency

Unfortunately, the simplest path to legalizing cryptocurrency in Hawaii — exempting cryptocurrency companies from the state’s Money Transmitters Act — was closed when SB2697 was killed in committee.

At present, both of the bills proposing a complex licensure scheme for cryptocurrency companies, SB3025 and HB2108, are still alive, though the Senate Ways and Means Committee has made no decision yet on HB2108.

Assuming that at least one of the licensure bills goes to conference committee, it is still uncertain whether a licensure bill will come out of this session.

In the meantime, the House has adopted a resolution calling for the continuation of the Digital Currency Innovation Lab, HR115 and HCR115, though a similar set of Senate resolutions was deferred, SCR30/SR25.

Finally, a Senate bill to create a blockchain and cryptocurrency task force, SB2695, has passed the House and is waiting for the Senate to agree to amendments or send it to conference committee.

In related news …

Taxpayers might get rebate after all

If it were up to the institute, it would be at least $1,365 each

The Honolulu Star-Advertiser reported on its front page yesterday that chairs of the Legislature’s two finance committees are “proposing to spend $250 million on state tax rebates ranging from $100 to $300 per taxpayer depending on personal income.”

The move represents a revival of Gov. David Ige’s plan to issue tax rebates of $100 each to all Hawaii taxpayers, at a cost of about $110 million. That plan, however, was deferred because of how it might conflict with restrictions on federal COVID-19 relief money that discouraged tax cuts.

Now, according to reporter Andrew Gomes, “there appears to be a path to provide even larger tax cuts than Ige proposed without running afoul of the federal limitations, with state Rep. Sylvia Luke, chairwoman of the House finance committee, saying there is a need to provide relief to local taxpayers because of the rising costs of gas and other goods.

Writes Gomes:

“To carry out the new plan, the House Finance Committee amended SB514 on Tuesday to include a tax rebate with language from the bills proposed by Ige, though with a blank amount. …

In written testimony on the bill, the Grassroot Institute of Hawaii suggested that lawmakers top the $100 rebate amount proposed by the governor by a factor of more than 10, given a budget surplus it estimated at around $3 billion.

“The governor hoped to add about $110 million to the economy via a refund of $100 per taxpayer and dependent,” said Joe Kent, the organization’s executive vice president. “However, we suggest that, given the amount of its budget surplus, the state return at least one-third of the windfall, or about $1 billion, to the taxpayers.

“That would equal approximately $1,361 for each of Hawaii’s 734,673 taxpayers. As we noted, the state can afford to do far more than a mere $100 each for Hawaii taxpayers, who have gone through so much in the past two years.”

Read the Star-Advertiser article here. Read the institute’s testimony here.

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