Pay-to-Play

From Horns of Jericho Blog, April 29, 2015

Once again, the Honolulu Star-Advertiser (HSA) managed to look past the real issues when they reported on multi-million dollar tax credits being considered in the waning hours of the 2015 Legislative session.  While investigating the five w’s of journalism (Who?, What?, When?, etc.), they failed to capture the “so what?” and once again leave the public blind to pay-to-play politics that take place on a daily basis.

In comments to HSA about the state budget, Sylvia Luke was quoted:

“We just wanted to make sure that what we passed was balanced and responsible,” said House Finance Chairwoman Sylvia Luke (D, Punchbowl-Pauoa-Nuu­anu). “We are concerned about the spending in the out years, and because of that we are controlling government growth and spending at the same time.”

In the same article, Jill Tokuda added:

“We are very aware of the mounting obligations that we have as a state, so we’re making sure that we balance all of the increasing costs that we have against wanting to make sure that the budget that we passed reflects the priorities that we have as a Legislature — to funding various needs of education, to natural resources, to public safety, all of these different things — and also making sure that we can sustain these costs over time,” said Tokuda (D, Kai­lua-Kane­ohe).

Yet, on what seemed like the very next page, HSA wrote:

With state lawmakers heading into the final days of the legislative session for this year, it remains uncertain how they might amend the tax credit law, but proposals have been floated to double the size of the credit that could be claimed by investors.

If state coffers were truly as tight as Luke and Tokuda claim, then the doubling of a tax credit for companies being displaced by a project being undertaken by the state would be completely out of the question.  While simultaneously advocating for a “skinny” state budget and doubling of tax credits, Luke and Tokuda manage to speak out of both sides of their mouth.  The Navatek representative (Ann Chung) quoted in the very same article notes that they are not seeking a doubling of the tax credit that would leave taxpayers on the hook for $20-million in lost revenue.

With nothing obvious indicating the strange actions being taken by Luke and Tokuda, taxpayers are left to suspect much more sinister intentions are behind this tax credit.  An evaluation of campaign contributions prior to last November’s election reveals 77 separate contributions by Navatek or by employees linked to Navatek made to elected officials totaling $81,000.  Below is a summary of the contributions to different elected officials:

The list itself reads as a who’s-who of Hawaii politics in a clear attempt to ensure that this tax credit is pushed through.  Former governor Abercrombie was a strong supporter of this tax credit and benefitted greatly from employees of Navatek.  Navatek went so far as to use multiple employees to funnel contributions to the Abercrombie campaign to skirt the $6000 cap in contributions.

Peculiarly, House members rank higher than senators on the same list.  Those that follow politics at the Legislature note that contributions made to senators are generally double those made to representatives based on campaign spending limits and also the influence that each elected official holds.  [1]  If the House were truly a power center, then one would expect the Speaker of the House (Joe Souki) to also rank high on top of the list.  This is clearly not the case.  In fact, both the Speaker of the House and the Senate President (Donna Kim) rank low on the above list.

An alternative explanation of committee chairmanships also fails to pass muster.  While Sylvia Luke and Scott Nishimoto hold positions of power as the chair/vice-chair of the House Finance Committee, similar contributions were never made in the period to Jill Tokuda or Ron Kouchi. [2]  The same comparison fails when Navatek contributions to majority leaders in the House (Scott Saiki) and Senate (formerly Brickwood Galuteria) are examined.  Clearly, Navatek was not looking to “grease the wheels of democracy”, otherwise these telltale patterns would have unfolded.

The last possible explanation is to view key individuals in the House of Representatives as obstructionists looking to exploit a company that has been made vulnerable by previous legislative decisions.  It is as if the legislature administered the poison and is selling the antidote.  If the budget were clearly as tight as Luke claims in her quote, she would be holding tightly on to all revenue streams possible to ensure that state coffers remained solvent.  By Luke’s own words and a simple extension of her logic, the doubling of a tax credit does not make fiscal sense.  It is a tax credit that was never sought for by Navatek to begin with.  So just who exactly is Sylvia Luke looking out for?  It is clearly not the taxpayers.

Sylvia Luke only looks out for Sylvia Luke.  Clearly, $5500 in contributions to her campaign is ample for her to sign away $20-million in state revenue.  In the absence of any other explanations, Luke saw deep pockets when the issue was taken up and was certain to leverage her power to get what she needed.

Quid pro quo.

While HSA’s coverage was clearly near-sighted, they at least managed to appropriately describe the situation when they quoted Marcus Oshiro:

“I’ll give them an ‘A’ for audacity”.

[1] – A senator is one of twenty-five members, while a representative is one of fifty-one members.  By this logic, a senator’s vote is twice as powerful as a representative’s vote.

[2] – While Tokuda was not Ways and Means chair during the reporting periods examined, contributions to former Ways and Means chair, gubernatorial candidate and current governor David Ige are dwarfed by Luke, Nishimoto and Saiki.

* A spreadsheet detailing campaign contributions that Navatek has made can be accessed here.