Hill highlights flaws of ‘green fee’ for H. Hawaii Media listeners

from Grassroot Institute of Hawaii, April 5, 2023

Gov. Josh Green’s proposed $50 “visitor impact” fee to be levied on every tourist coming to Hawaii could have many unintended consequences — including how tourists spend their money here, according to Malia Hill, policy director for Grassroot Institute of Hawaii.

Hill spoke about the governor’s measure, SB304 SD2, this past Sunday with host Johnny Miro’s on the H. Hawaii Media radio network.

She said the $50 fee, also called a “green fee,” might be just a “sliver of the budget for a vacation in Hawaii,” and likely would not affect visitors’ lodging or transportation expenditures.

But if a family of four vacationing in Hawaii has to pay $200 for the visitor impact fee, she added, “that comes out of their budget somewhere. Maybe it’s the souvenirs. Maybe it’s where they go to dinner. Maybe they decide they don’t want to rent snorkel equipment now, or they decide not to book a boat trip. It’s a mistake to just assume you can increase the cost of the vacation, and it won’t affect the industry in any way.”

Hill said the fee also might incentivize tourists to avoid places that require the fee. 

“I mean, you can imagine it now, all the, like, little websites that are, you know, ‘Six ways to get around the visitor fee in Hawaii.’ ‘Six beaches that don’t require a fee.’ You know, that kind of thing. You’ve got to know that that’s going to happen if the fee is really limited. So what you’re really doing is just shifting the visitor impact around, and you’re creating new issues of congestion and use.”

Another issue is how the fee would be collected. Supporters say it’s a $50 license fee that would be required if a visitor wanted to visit a state park, beach trail or natural area. Hill said enforcing it might be simple for an entry point to a trail, but what about beaches? Are they going to have a park ranger checking the IDs of sunbathers?

Then there’s the question of whether locals have to prove they’re residents. The “green fee” measure defines a Hawaii resident as anyone who has filed Hawaii income taxes in the past year, has a valid Hawaii ID or school ID, or someone who can show an official residency document for the last 30 days, lsuch as a utility bill. 

By that definition, Hill said, Oprah Winfrey would be considered a resident, because she could show a utility bill for her Maui home. But “your cousin, who had to move [from Hawaii] to Las Vegas two years ago to get a job, is not a resident,” and would have to pay the fee.

Hill also talked about how the proposal, if enacted into law, probably would be deemed unconstitutional as well.

Asked to evaluate SB304’s chances of becoming law, Hill said it did make it out of its final committee hearing, but the House added many amendments, including deleting the specific $50 amount, which she said could be “their way of saying, ‘We’re not really sure. We really need to talk about this some more.”

TRANSCRIPT

4-2-23 Malia Blom Hill with host Johnny Miro on H. Hawaii Media radio network

Johnny Miro: Good Sunday morning to you. I’m Johnny Miro. Once again, it’s time for our Sunday morning public access programming on our five H. Hawaii Media radio stations here on the island of Oahu: 101.1 FM, 107.5 FM, 101.5 FM, 97.1 FM and 96.7 FM.

And we once again take a trip and a visit over to Grassroot Institute of Hawaii. And their work can be found at grassrootinstitute.org. And we have, once again, the pleasure to speak with Malia Hill, the policy director. Good morning to you, Malia.

Malia Hill: Good morning.

Miro: Thanks for coming in. It’s the “green fee,” the discussion. One of the governor’s big proposals this session was a visitor impact fee, otherwise known as the green fee, a $50 fee that would apply to all tourists coming into the state of Hawaii. Never been done before. I don’t know if it’s been thought about before. 

The proceeds, it says, would go towards paying for environmental protection initiatives, but it isn’t perfect. So let’s see what you have to say about it, Malia. 

Can you give a bit of a background about why this fee was proposed, and exactly how would it work?

Hill: Yes. You know, this is something that’s kind of been floating around in conversation for a little while now. HTA [the Hawaii Tourism Authority] proposed it as part of their Oahu Destination Management Action Plan. It was supported by the Tax Review Commission in 2022. Some people call that the Tax Hike Commission, so that should just tell you a little bit about that. 

And then Gov. [Josh] Green made the visitor fee part of his campaign, and he’s been supporting it everywhere on social media, he tweeted about how it would be used to support various environmental projects. 

How it would work, you know, that all depends on what actually comes out of the final bill. And, you know, it’s still working its way through the Legislature, so that’s still up in the air. 

But, you know, we do know what the governor and his supporters have said about it. They say it’s a $50 license fee — that amount is still sort of subject to negotiation, but it’s supposed to be a $50 license fee — that would be paid by every visitor and would be required if you wanted to visit any state park, beach trail, natural area, that kind of thing.

Miro: Yeah, I’m looking at the beach thing being an issue. I mean, they’re going to have a park ranger out at a beach, you’re lying on the sand, and they’re going to look at your ID or something? How will that work, just in your thought process?

Hill: You know, I mean, that’s a really, really good question. And I think it’s one of those things that people haven’t given enough thought to. You know, how do you enforce it? How do you prove that it applies to you, it doesn’t apply to you? How do they check it?

You know, it’s simple enough when you’re talking about trails or something where there’s an entry point, but that enforcement issue is a huge, huge problem. 

And in the bill, they’ve even delayed enforcement for a few years — or the penalty part of enforcement anyway — because that sort of just acknowledges, you know, “We haven’t 100% figured this out.”

Miro: Alright. What about Hawaii residents flying back from the mainland? You know, who does it apply to? Would that be the case for Hawaii residents flying back from the mainland? Would they have to pay?

Hill: You know, this is a complicated thing again, because, you know, it’s one thing to just sort of, in the conversation, go residents, visitors, but when you have to do it for a law, well, then you have to set in some real big rules, and that gets a little strange. 

So the bill — which is SB304, by the way — it goes ahead, and it defines a resident as someone who has filed or paid Hawaii income taxes in the last year, someone who has a valid Hawaii ID or school ID, or someone who can show some kind of official residency document for the last 30 days.

So, you know, we’re thinking like a utility bill or maybe, you know, something from a bank or a government agency. That’s how you prove that you’re a resident. 

So, you know, whether that hypothetical Hawaii resident flying home from the mainland needs to pay, it really depends on what do you consider local? 

So, you know, if you go by the definition in the bill, Oprah Winfrey is a resident. She has a home on Maui. She could pull out, you know, a utility bill. Mark Zuckerberg is a local, according to this. 

But, you know, your cousin, who had to move to Las Vegas two years ago to get a job, he’s not a resident. He’d have to pay.

Miro: Yeah, I see. And I think we just touched on this, but the enforcement policy, the enforcement process, just exactly in your mind and Grassroot Institute, how would the state make sure that everyone on these hard-to-manage areas … make sure that their green fees have been paid?

Hill: Yeah. You know, as I mentioned, I don’t think they know. But, you know, this is all sort of very hypothetical. They want it to be paid through a website or an app, you know. I think people think, like, “Oh, it’ll just be something you have to pay when you enter the state.” 

No, you can’t really do that. So people would have to … You know, the example I think the governor used was, you know, something similar to how people, you know, did COVID testing and that kind of thing.

Miro: Umm.

Hill: And that’s what they’re sort of thinking about, but, you know, there’s a sort of difference there, and there’s a difference of how many people we’re talking about. There’s a difference with, you know, how do you enforce it? 

You know, do you make people show your license? Do you make locals prove that they’re residents? You know, does everyone in the car need a Hawaii ID in order to go, you know, on a trail?

If you don’t have a Hawaii ID, do you need to carry your, you know, Hawaii state income tax filing with you to prove that, you know, “No, it’s OK, I can go on this trail”? And, you know, how do you, the person enforcing it, do that if they don’t want to check every single person for OK. 

You know, these are these little details that, you know, when it’s just a big idea that you’re pitching, you can just kind of gloss over it. But when it comes down to actually making the law, you really have to address them.

Miro: Malia Hill, policy director from Grassroot Institute of Hawaii. You wrote an article about this in the Honolulu Star-Advertiser last week, and you raised a number of problems with the proposed fee. One was that the fee might be, well, unconstitutional. Now, can you explain that?

Hill: Definitely. You know, I’m not the first to point this out. Even UHERO [the University of Hawaii Economic Research Organization] pointed it out, when the, you know, when the whole visitor fee issue sort of first became something people were paying attention to. And to kind of super simplify it — because I don’t want to start just quoting Supreme Court cases — the Supreme Court does not like laws that inhibit the right of people to travel freely. That kind of makes sense.

And it also doesn’t like laws that tax residents and non-residents differently without a good reason to do so.

You know, now we’re saying that this green fee exists because, you know, we need to preserve the environment, to protect the environment. 

The thing is that residents would arguably benefit more from that than visitors. Arguably, residents have as much of or, you know, even more of an impact on the environment than visitors.

So you don’t have a really good, strong case that, you know, this is a burden that should only be placed on visitors. 

You know, the people who say that the fee is fine, it’s legal, they say it’s like a user fee, like having to pay to enter a park. 

And, you know, that’s true. That kind of thing has been upheld by the court. But here’s the problem: If every visitor has to pay this fee, regardless of, you know, what parks they go to or beaches or whether they sit in their hotel room the whole time, then it’s not a fee. It’s not like a user fee that’s like a tax, and that makes it vulnerable to this challenge.

If people don’t have to pay it, you know, unless they’re using very specific parks, you know, like a user fee, then maybe it will pass legal muster and not be challenged. But then you’re probably not going to make as much money off of it as you thought. 

So, you know, isn’t this sort of Catch-22 in terms of, you know, how does this really work?

Miro: Exactly. Alright. Malia, how might this fee affect tourism? The golden goose for the state of Hawaii is what we rely on to make everything work, the engine work. Would it have any negative impacts on the economy?

Hill: Well, you know, I think there’s two things to think about here. First, you know, we go back to this question of how it’s really worded when it really happens. And, you know, right now, it looks like they only mean it to apply to state parks and beaches. 

So then, if the fee doesn’t apply to county parks and beaches, then you might just be incentivizing tourists to avoid anything that would require the license fee.

So what you’re really doing is just shifting the visitor impact around, and you’re creating new issues of congestion and use. You know, you have to pay attention to the sort of unintended consequences. 

I mean, you can imagine it now, all the, like, little websites that are, you know, “Six ways to get around the visitor fee in Hawaii. Six beaches that don’t require a fee.” You know, that kind of thing. You’ve got to know that that’s going to happen if the fee is really limited. 

Then there’s also the fact that, you know, there is a possibility of an economic impact. 

You know, they say, “Well, it won’t keep tourists away. $50 is a tiny sliver of the budget for a vacation in Hawaii.” And yeah, sure, maybe it won’t keep people away, but it could affect the way that they spend, you know.

Maybe it doesn’t affect them coming, or it doesn’t affect transportation. It doesn’t affect the need for a hotel, so it doesn’t affect lodging. 

But say you have a family of four, and everyone’s over 15, so they have to pay $200 in fees, and that comes out of their budget somewhere. Maybe it’s the souvenirs. Maybe it’s where they go to dinner. Maybe they decide they don’t want to rent snorkel equipment now, or they decide not to book a boat trip.

You know, it’s a mistake to just assume you can increase the cost of the vacation, and it won’t affect the industry in any way. And I think it’s probably most likely to affect the sort of downstream in tourism as opposed to, you know, affecting, you know, rental cars or lodging, or that kind of thing.

Miro: Umm. Exactly. Alright, so, what is it? It’s SB, what was the bill, SB …?

Hill: SB304.

Miro: SB304. So, where exactly is this fee in the Legislature, and does it have a good shot at becoming law?

Hill: You know, I do think, you know, it does, although I guess I can qualify that by saying, in the Hawaii Legislature, you can never really be sure until everything is done. But it did pass the Senate, and it just passed out of the House Finance Committee, which was its last committee hearing. 

However, it also acquired a lot of amendments along the way. I mean, House Finance took out the $50 thing, I’ve heard. Those final amendments are still waiting to come online, but I’ve heard that they’ve removed the $50 fee part. 

So, you know, it’s possible the Senate will just agree with the House amendments and send it to the governor, but I don’t think so, especially with no amount of the fee listed in the bill. So then it’s really just going to have to go to conference committee. If the conference committee sorts out the differences, then it will pass, and Gov. Green will almost certainly sign it. 

So I would say, sort of, it’s on the, I don’t know, 20-yard line.

[laughter]

Miro: Good football analogy. If they take out the $50 impact fee, where are they going to get the funds? The House?

Hill: Yeah. That’s really the problem. And maybe, you know, the way that our Legislature works, taking out that $50 specified fee is their way of saying, “We’re not really sure. We really need to talk about this some more.”

Miro: OK. Alright. So if we don’t use a green fee, so if Hawaii doesn’t use a green fee, what might be a better way to provide funding to protect the environment, Malia?

Hill: You know, I think that we get too wrapped up in this idea of “We need to do this to have this effect.” You know, this is really just a special fund to send money to state agencies and environmental groups. But we don’t need to have a special fund to help the environment. 

In fact, you know, special funds have been criticized by the Hawaii auditor. They can end up with very little oversight and accountability.

We can still fund these kinds of projects through the general fund. And if it’s something that, you know, taxpayers, voters, they think is important, then we can, you know, make budget cuts to find the funding for those programs. We can use some of the transient accommodation tax funds. We can raise the transient accommodation tax if it’s, you know, something that people agree, “Well, you know, we want the money from the tourists. The tourists are those who’s going to have to pay this, and we want this much.”

I think, in fact, I would say it worries me a little that we don’t look that way. If it’s so important to take the money from the tourists, why didn’t we reach for the tax that is, you know, our tourism tax? We created a new one. 

But, you know, there’s other tax hikes. There’s other places you can get this money and fund environmental projects through, if that’s what you think is very important.

Miro: Policy director from Grassroot Institute of Hawaii, Malia Hill, and it’s grassrootinstitute.org. No “s,” OK? GrassrootInstitute.org.

I’d like to ask questions kind of related, if I may. We’ve heard that the Legislature’s looking to replace the Hawaii Tourism Authority with an Office of Destination Management. Now, can you give a little bit of a background about how the new office would be different from Hawaii Tourism Authority?

Hill: Man, I really wish I could, but [laughs] I actually have looked at this bill, and I am having a hard time …

Miro: Really?

Hill: … seeing how it will really, really functionally be different, because the bill that repeals the HTA makes a new agency that just sort of sounds a lot like the HTA but, you know, with, like, better … better rhetoric. 

You know, it sounds nicer, but it’s still sort of the HTA. It still promotes Hawaii as a destination. It still manages the Convention Center. It still has to, you know, come up with tourism strategies.

The real difference is just that there’s a lot more in there about destination management, holistic approaches, cultural sensitivity, regenerative tourism, these, like, very popular words when it comes to time to talk about tourism now. 

But, you know, even HTA is the one who came out with the, you know, plan for destination management that we’ve been talking about with the green fee, or HTA has put out stuff about regenerative tourism. 

So functionally, it’s hard to see what the real difference is, except that this new agency doesn’t have to fight for its existence the way that HTA is right now.

Miro: OK, that’s a plus, I guess. Anything else you’d like to add before we wrap things up this Sunday?

Hill: Well, you know, I don’t want to give the impression that, you know, I hate the idea of doing something for the environment, because that’s not really what this is about. It’s more about the problem with the impact fee. And, you know, people who like this idea of the impact fee, they talk a lot about how much public support it is. 

But really, that’s just about the idea of paying for conservation efforts. And, you know, of course, that’s popular. You know, lots of people like the idea of putting money into conservation efforts. But there’s a really big difference between that idea and the nuts and bolts of what this bill actually does. 

You know, there’s nothing wrong with liking that idea. Hey, visitors should pay some share of helping us preserve the environment.

But in the real world, you know, this fee is not the practical way to address the issue. And, you know, beyond that, it doesn’t even address some of the other things that people wish that this money would go to, like infrastructure and housing and things that, you know, really affect the day-to-day lives of Hawaii residents. 

So, you know, there’s more practical, more effective ways to fund conservation and protection of natural resources, and I think that’s where our focus should be.

Miro: And it sounds like they’re being impressed by the look of the sausage, but they’re not in the back like you are, looking at how the sausage is actually made.

Hill: Exactly. Sometimes you do have to take a peek at that sausage-making process.

Miro: [laughs] Wow. Great job, as usual, Malia, on the green fee. The green fee, we’ll see what happens to this bill. It has passed the Legislature. It’s gone through the House. There’s been amendments put through, but now we’ll see how this proceeds.

Great job. We hope to speak to you, once again, in the very near future from you folks. Where can they go to reach your work at Grassroot Institute?

Hill: Yes. Please visit us on the website at grassrootinstitute.org, where you can find a bunch of our reports and commentaries. And yes, no “s.” It’s just the one. grassrootinstitute.org.

Miro: The root of all knowledge right there. Alright, enjoy your Sunday. We’ll talk to you again soon. Thanks for chiming in, Malia.

Hill: Thank you.