Good news, bad news at Legislature’s halfway mark

from Grassroot Institute of Hawaii

The Hawaii Legislature is halfway through its 2023 session, and so far it has been a mixed bag, according to Ted Kefalas, director of strategic campaigns for the Grassroot Institute of Hawaii.

Speaking this past Sunday with host Johnny Miro of the H. Hawaii Media radio network, Kefalas said some of the bills supported by the Institute still appeared to have a good chance of making it to the Gov. Josh Green’s desk for final approval, but others looked like they were not going to make the critical March 9 “crossover” deadline. 

Crossover is when bills move from the House to the Senate and vice versa. A bill needs the approval of both chambers before it can be sent to the governor for final approval.

Asked if there had been any surprises so far, Kefalas singled out a bill that would have allowed more duplex, triplex and fourplex housing in urban areas.

“This bill didn’t even get a hearing, even though we know how big of an issue housing is,” he said. 

Among bills still alive that the Institute supported is one that would allow doctors from other states to practice in Hawaii without having to go through the state’s complicated licensing process. 

He said similar bills for other healthcare professionals also are moving forward, except that they have been amended to create working groups to just study the proposals. He said that was upsetting because “because we need action sooner rather than later” to end Hawaii’s shortage of healthcare workers. 

Kefalas said a bright spot so far is that “a lot of major tax bills look like they’ve been killed,” including the proposed capital gains tax increase and so-called wealth-asset tax. 

TRANSCRIPT

3-5-23 Ted Kefalas with Johnny Miro on H. Hawaii Media radio network

Johnny Miro: Good Sunday morning to you. I’m Johnny Miro. It’s time once again for our H. Hawaii Media public access programming, Sunday mornings at 9 a.m., on our five Oahu H. Hawaii Media radio stations: Oldies 101.1 and 101.5 FM, 97.1 FM, 107.5 FM and 96.7 FM. 

Once again, we’re going to be speaking with a person from the Grassroot Institute of Hawaii, and all their information can be found at grassrootinstitute.org. And joining us this morning would be their director of strategic campaigns, Ted Kefalas. 

Ted, good morning to you. Thanks for joining us this morning.

Ted Kefalas: Hey, Johnny. Good morning. Thanks for having me today.

Miro: Well, a lot going on at the Capitol, a lot in the news. So that’s what we’re going to be discussing. The legislative session, Ted, already almost halfway over and coming up on a key deadline called crossover. It’s called crossover. 

So I guess before we move any further into that, can you basically give us some insight into a few of the things lawmakers are working on? 

But, like I said, before we get into any of that, can you please explain what crossover is, Ted, and why it matters?

Kefalas: Sure, absolutely. Crossover is when bills move from one legislative chamber to the other, so you have to think of it almost like a do-or-die elimination round tournament. Any bills that don’t advance are out for the season. And so, out of the more than 3,000 bills introduced in January, probably fewer than half will survive. 

The state Constitution, actually — now this is something that people don’t realize because crossover is technically March 9 — but the state Constitution requires bills to be published at least 48 hours before a final vote.

And so that means that the Legislature requires all their bills to be out of committee by Friday, and that’s what’s known as first decking. And so any bills that aren’t heard in committee by then are essentially dead in the water. 

And because of that, this past week we had probably the most bills that I’ve seen in a while. The Legislature acted on probably close to 700 bills in seven days. So this is definitely an exciting time at the Legislature, and one we’re paying attention to closely.

Miro: Indeed it is. Ted, when will we know which bills are dead and which ones survive?

Kefalas: So, as I mentioned, bills that haven’t been heard in their committee by Friday [March 3]  are pretty much dead, but the official crossover date is March 9. And so you know if a bill doesn’t get out of committee, it can’t get a floor vote. No floor vote, it’s not getting passed to the other chamber, and it has no chance of getting signed into law by the governor. 

So, you know, technically, legislators could pull a bill directly out of committee to give it the floor vote, but that’s extremely rare. So we already have kind of a good sense of where things sit, but just waiting until March 9 for it to be, you know, official.

Miro: I’m Johnny and with us today is Ted Kefalas from the Grassroot Institute of Hawaii. Now, the Grassroot Institute is a nonpartisan public policy think tank based here in downtown Honolulu and Ted is the director of strategic campaigns. 

And let’s see, Ted, any big surprises or disappointments about things that didn’t make it through, in your opinion?

Kefalas: Well, you know, I think if you think back to November, you remember all of the rhetoric about housing. And it seems like we’re constantly talking about housing and how to get more of it, and how to, you know, lower that cost for our residents. 

And we were supportive of a bill similar to what they did in California that would allow for more duplexes, triplexes and fourplexes in urban areas. But unfortunately, this bill didn’t even get a hearing, even though we know how big of an issue housing is.

All too often, you know, legislators use this rhetoric of cutting red tape, and this was a golden opportunity to do just that, while also allowing homeowners to earn a profit by splitting their lots and allowing them to have duplexes and triplexes. 

So we were pretty disappointed with that, but another one that — and I wouldn’t call it a surprise, Johnny — but what happened with the healthcare licensure compacts.

So, the COVID pandemic really highlighted the lack of medical workers here in Hawaii. And we know we need to find ways to attract new workers. Compacts do just that. They make it easier for doctors, nurses, EMS professionals, etc., to move here if they’re already licensed to practice in another state. 

So, you know, we’re not talking about one or two other states that are members of this compact. For the physician compact, there’s 37 other states, plus D.C. and Guam, that are already members. And when you look at nurses, there’s already 40 states that take part in this. 

Luckily, the physician compact is still alive, but a lot of the other compact bills were amended to become working groups. And if you don’t know what a working group is, it essentially means that they’re just going to study the issue for right now, and there won’t be any real action. And that’s really upsetting, because we need action sooner rather than later.

Miro: True. Alright, Ted. How about the governor? You said he was coming in with some bold proposals. Are all the governor’s big proposals still alive right now?

Kefalas: You know, if you remember, [Gov.] Josh Green promised during the campaign to stop taxing food, and it was a major part of his platform. 

But unfortunately, it looks like that proposal is dead. And that’s a real shame too, because that proposal had an opportunity to give immediate relief to local residents that are currently dealing with record levels of inflation.

A lot of legislators went on to claim that it didn’t make sense to eliminate the GET on food because tourists pay the GET when they eat at restaurants. And, you know, that makes sense, but the now-dead bills were actually targeted at groceries that are overwhelmingly bought by residents. 

So that was, you know, a disappointment to see that that bill was not passed by the Legislature, but luckily, a lot of Gov. Green’s proposals, for the most part, have stayed intact.

Miro: OK. Good to know. And I know there are a few issues that you folks at Grassroot Institute of Hawaii have been focusing on, Ted, so I’d like to ask you about those. 

Let’s start with the healthcare. You mentioned a little bit of that. I know you’ve been working on some of those reforms, you folks over there. What are some of the major healthcare proposals that you support that have gained traction this session?

Kefalas: I just mentioned removing the general excise tax on groceries, but there were also proposals this year to eliminate the GET on medical services. 

Now, in Hawaii, we’re one of only two states that taxes medical services by private-practice physicians. Because the excise tax is on gross receipts, it becomes a significant expense to these doctors and makes it really difficult to turn a profit, especially for, you know, the new doctors that are just starting out and still paying off their student loans.

We know that there’s a doctor shortage. A recent report came out that said there’s more than … we’re short more than 750 full-time physicians, and part of that reason is because of the GET. I mean, think about it. Why would a doctor practice in Hawaii if it means they barely break even? 

Miro: Um-hmm. Yeah.

Kefalas: So this year, there are about a half dozen bills in the Legislature that proposed such an exemption, but unfortunately, most of those bills were also killed in committee.

I don’t want to be Debbie Downer here, so there is a sliver of hope, and a bill that would remove the GET from Medicaid, Medicare and TRICARE. And that’s important because we’re currently the only state that taxes those services. And the GET can’t legally be passed on to those patients. 

That forces doctors to completely eat those costs out of pocket, and that’s also one of the main reasons a lot of doctors refuse to see these patients. That limits access to care, especially on those neighbor islands.

You know, in addition to that, we’ve also been looking at ways to attract more medical professionals to come here to Hawaii to fill the void. We talked about it a little bit earlier, but that’s why we’re in favor of interstate compacts that would’ve been adopted across the country. 

Again, that means that Hawaii would be able to accept medical licenses that were granted out of state, and that helps alleviate the doctor shortage. 

We should be making it easier for qualified professionals to practice here, and not make them jump through a bunch of unnecessary hoops.

Miro: I know I discussed with [Grassroot President and CEO] Keli’i [Akina], I do believe, about not only that but about the housing for these medical professionals who are coming out of state. What about housing, Ted? Are there any housing reform bills that you’re following?

Kefalas: You know, one bill along those lines of healthcare is really interesting. It would allow educational, medical and religious organizations to build housing on land that they already own. 

Now, that’s important, because it could be a key to allowing these institutions to get a leg up in recruiting professionals to come to Hawaii. 

We talked about it earlier and everybody knows [about] the high cost of living that we face here. So to be able to bring these professionals into the state and have them find housing easily would be a game changer.

I’d also like to just touch on Gov. Green’s introduction of the first-ever chief housing officer, Nani Medeiros, to focus on the housing issue as a whole. 

Nani has previously said that it’s a supply issue, and that by increasing the supply, we can lower the prices. And in conversations, you know, she has previously claimed that the government has done a lot of things in the past decade or two that has directly increased costs.

So, you know, we’re really excited about the potential to work with her and the governor’s office to try to cut through a lot of the government regulations that we see that are holding back housing, and we can start trying to get the ball rolling to lower those costs and allow people to stay here in Hawaii.

Miro: OK, Ted. Grassroot Institute has focused a lot on taxation and spending. Now, are there any big tax hikes on the move that people should know about? Or any tax reductions, hopefully?

Kefalas: I’d tell you what: Luckily, a lot of major tax bills look like they’ve been killed. This includes the capital gains tax increase and the wealth-asset tax proposal. 

Now some of those may sound like good proposals, but those bills seem to assume that people that are getting taxed would do nothing in response. That would essentially incentivize these same individuals to adopt creative accounting strategies — which we all know they’ve got some great accountants — or they just move to the mainland.

So, you know, those things, while they may sound good, they really, once you examine them, aren’t great. And luckily, like I said, it looks like they’re dead. 

But, you know, the governor also talks in his State of the State about a lot of tax reform, and he introduced his Green Affordability Plan. 

So we’re really glad that the governor is taking this issue seriously. We’re glad that the Legislature is following through. Those bills still seem to be alive and kicking, so we have a lot to be thankful for when it comes to tax reform. 

We’re hopeful that the Legislature will, again, follow through and actually adopt these tax reforms and give our local residents some much-needed relief.

Miro: OK, so within that, what are the prospects for the governor’s tax plans?

Kefalas: We’re hopeful that the Legislature is going to pass these bills. Like I said, we need relief today. 

Now, tax credits are always a little bit more difficult than a simple tax cut, because people have to remember to claim that during tax season. 

But, that being said, something’s better than nothing. So, hopefully, we can at least take some baby steps in getting some tax reform for our local citizens.

Miro: Alright, joining us this morning, Ted Kefalas from the Grassroot Institute of Hawaii, grassrootinstitute.org for more. 

Ted, I talked with your colleague Malia Hill [Grassroot Institute policy director] a couple of weeks ago about the efforts to make Hawaii’s government more transparent. What are the prospects for some of those bills?

Kefalas: Unfortunately, a lot of them look to be dead, but there is a big one that recently passed the House Finance Committee and will hopefully be approved by the Senate. 

This is a bill that would cap fees for open records requests and waive fees for requests that are made in public interest. And so the intent of these bills is to kind of combat a lot of the excessive fees that are used as a tool to discourage requests for records.

I can’t tell you how many times we’ve made an open records request, only to get a price tag of, you know, something upwards of $100,000. And as a non-profit organization that we have the public interest in mind, there’s no way that we can be able to pay that, just to be able to inform people about what’s happening in their government. 

So we’re really glad that this bill has some momentum and that legislators are starting to understand that there is value to being open and transparent.

Miro: Yeah, there needs to be more discussion on that, too. So what happens now, Ted, for the rest of the legislative session, in your opinion?

Kefalas: As we mentioned earlier, Friday was first decking, which means that all bills have to be out of their final committee in order to still be considered. After the bills have been passed out of their originating chamber, they’ll go to the other chamber, and we’ll kind of start the process all over again. 

So, for example, once the bill passes the House, now it crosses over to the Senate and it must go through the process of committee hearings again.

After all of that, the House and the Senate will get together in what is known as conference committee to hash out any differences, because only one version of a bill can head off to the governor for his signature. 

Miro: Um-hmm.

Kefalas: So that usually happens around late April, early May, but what’s kind of messed up about these conference committees is that a lot of the discussion is done behind the scenes, and people don’t even have an opportunity to weigh in. It’s not like a typical public hearing. So in the end, it’s really just a few legislators that are making these decisions for all of us.

Miro: Alright, Ted, finally, if people want to contact our lawmakers to speak on any of the issues you mentioned today, what’s the easiest way for them to do that?

Kefalas: We actually have a program on our website that allows people to write to their state legislator in as little as two minutes. If you want, you can go to www.grassrootinstitute.org/action.

We understand that people have other things going on in their lives, but it is important to get involved, and that’s why we’ve tried to make this process as simple as possible. 

All you have to do is put in your information and you can send a customizable message to your state rep and state senator. 

And again, for those that are listening, if you want to take action and reach out to your state lawmakers, you can do that at grassrootsinstitute.org. That’s .org/action.

Miro: Great. Alright. That’s Ted Kefalas, the director of strategic campaigns from the Grassroot Institute of Hawaii. Thanks so much. Very informative, and we’ll see what transpires in the next few weeks. 

Thanks to the Grassroot Institute of Hawaii, grassrootinstitute.org. Ted, have a fantastic remainder of your Sunday and hopefully, we’ll talk to you soon.

Kefalas: Thank you, Johnny. Aloha.