Akina lauds Legislature’s Lahaina-response spending

by Grassroot Institute of Hawaii, May 16, 2024

The 2024 Hawaii Legislature accomplished what was expected of it this year — such as funding Lahaina wildfire recovery — but also made unexpected groundbreaking moves in the areas of income tax and housing regulation reform. 

Grassroot President and CEO Keliʻi Akina outlined the litany of Lahaina-response appropriations during a conversation on Sunday with host Johnny Miro of the H. Hawaii Media radio network. 

Not only did legislators earmark $1 billion to cover costs such as emergency housing and rental assistance, he said, they “allocated funds for more firefighting equipment, a state fire marshal and forest restoration.” 

Akina also praised Legislators for passing a “historic” bill proposed by Gov Josh Green that will enact “tax cuts amounting to $5 billion over the next six years through the form of a higher earned-income tax credit, increases to the standard tax deduction and adjustments to income tax brackets.” 

By 2031, he said, a family of four earning Hawaii’s median household income could see its income tax liability decrease by 69%, which “would effectively boost the income of that hypothetical family by 4% a year, according to the analysis of our tax officials.”

Another big win for Hawaii residents, Akina said, is a bill that, if signed, will exempt private practice doctors and dentists from paying the state general excise tax on care covered by Medicaid, Medicare and TRICARE healthcare insurance.

Lawmakers also pushed through numerous bills aimed at reducing housing regulations, including a measure that will mandate the counties to allow at least two accessory dwelling units on qualifying lots; and one that will make it easier to convert empty office space or retail space into housing, which Akina said will “create more livable, walkable communities that have been missing from our housing ecosystem.”

Akina also highlighted a temporary licensing bill for nurses to increase healthcare access, as well as several bills aimed at advancing government transparency by ensuring timely distribution of written testimony to board members, allowing audio and video participation in remote meetings, and setting clear time standards between board meetings.

TRANSCRIPT

5-12-24 Keli‘i Akina with host Johnny Miro on H. Hawaii Media radio network

Johnny Miro: All right, happy to have you along on this Sunday morning on Johnny Miro with H Hawaii Media broadcasting inside our five Oahu radio stations and our five stations on Kauai; also available via your smart device at HawaiiStream.fm and the Live 365 app. 

And we’re going to have a discussion about, well, something that took place for the last couple of months but that just wrapped up recently. It’s that time of year again — the 2024 legislative session is now complete. 

So the questions are which bills survive the quote-unquote “sausage-making machine” and which didn’t and beyond that what would be the chances that any of the bills that survive will be signed into law by the governor.

No better person to speak to about all of this than Keli‘i Akina, the president and CEO of the Grassroot Institute of Hawaii. Happy Sunday morning to you, Keli‘i, and thanks for joining me once again.

Keli‘i Akina: Well, very happy Sunday morning to you and all your listeners Johnny. It’s just great to be here today. And indeed this was a remarkable legislative session. A lot of good things happen for the people and I’m looking forward to sharing that with you.

Miro: Yeah, I was going, is this Hawaii? That’s good news. But there was a lot of focus on Lahaina’s recovery, Keliʻi. No surprise there after the devastating fires back in August of last year. 

So let’s start there. What did the state legislature do this year to address Lahaina?

Akina: Well, the increased wildfire risk statewide prompted legislators to put a lot of focus on rebuilding Lahaina and committed to their recovery. This year, they’ve allocated funds for more firefighting equipment, a state fire marshal and forest restoration. So that’s really going to be good.

Lawmakers also appropriated $1 billion to cover various costs stemming from the Lahaina disaster, such as $500 million for emergency housing and displaced residents, and $124 million in rental assistance for those ineligible for aid from the FEMA [Federal Emergency Management Agency]. And the budget includes $65 million for a victim-relief fund.

So a lot took place and the government is really showing a commitment to rebuilding and restoring Lahaina.

Miro: Joining me this morning is Keli‘i Akina, president and CEO of the Grassroot Institute of Hawaii, talking about the 2024 legislative session, which is now complete. 

Keli‘i, do you have any details on some of those appropriated dollars? What are some of the specifics that we know right now?

Akina: Well, new funding will include $10 million for equipment like bulldozers, fire engines, and water tanks for the Department of Land and Natural Resources, which cares for the state forests. That’s extremely important. 

Another $1.4 million for the department to hire 22 staff, and that includes a forester, mechanic and heavy equipment operators to protect against fires.

Then they allocated $7.4 million for the department to manage invasive grasses and other vegetation that fuel fires, restore native plants in areas burned by fire, and work with communities to prevent wildfires. 

And one more that I’ll mention is $172,000 for a state fire marshal and an assistant-in-training.

Now, this new fire marshal would review and assess fire risks in the state and work with county agencies to enforce the state fire code. This is a new development and it should put a lot more attention to preventing fires and dealing with them when they occur.

Let me just finally mention this as well. A million dollars was allocated for the University of Hawaii to develop a wildfire forecast system. And so that’s really going to be state of the art because it will make use of the latest artificial intelligence.

Miro: OK, OK. And Gov. Josh Green proposed sweeping tax cuts last year, but only his tax credits for lower-income residents were basically approved. This year, with all the concern that we just discussed for Lahaina taking center stage, how were the legislators able to find enough money to pass his more far-reaching state income tax-cut proposals, Keli‘i?

Akina: Well, this was a big win for the people of Hawaii because taxes have been rising, and one of the reasons they’ve been rising is because inflation goes up and a lot of people have found themselves in a higher tax bracket. And our people simply have needed relief from our being one of the most highly taxed states.

And we’ll take a look at this in a minute, but lawmakers passed House Bill 2404, and that approved tax cuts amounting to $5 billion over the next six years through the form of a higher earned-income tax credit, increases to the standard tax deduction and adjustments to income tax brackets. This is really historic.

Rep. Kyle Yamashita — he’s the chair of the House Finance Committee — said the changes are only the first step in needed tax reform, and he aims to work on the issue further. 

Here’s what he says: “Because at the end of the day, our biggest problem in our state is the high cost of living, our tax structure is at the root of that,” he told reporters.

So this bill is going to double the standard deduction that state taxpayers can claim when they prepare their 2024 taxes next year. And then adjust the income tax brackets and standard deductions upward in a series of steps in later years as Hawaii’s minimum wage increases.

Miro: So what will these income tax cuts mean for the average family here in Hawaii, Keli‘i? How much money will they save with this bill, do you think?

Akina: Well, the state Department of Taxation calculates those changes would mean a family of four earning Hawaii’s median household income — by the way, which is about $91,000 — would see their income tax liability decrease by 69% by the year 2031. That’s a huge saving that will make a big difference in the family’s life. But not only that, it’ll add money to our economy.

That same family would owe $5,323 in taxes under the current tax law, but would see that reduced to $1,639 in 2031. A big drop.

In all, the bill would effectively boost the income of that hypothetical family by 4% a year, according to the analysis of our tax officials.

Let me tell you what Sen. Donovan Dela Cruz said — he’s the chair of the Senate Ways and Means Committee — and he remarked that, quote, “one of the most substantial income tax relief measures our state has ever passed” — that’s he calls it — “beyond serving our immediate needs, this bill cast the hopeful gaze toward the future laying the groundwork for future generations to inherit a fairer and more equitable tax system.

Now, Johnny, we don’t always praise the Legislature. We are often very critical. But at Grassroot Institute, we’re cheering. We worked very hard on getting these tax bills passed, and these measures are going to make a real difference for the people. 

So this is a point at which we give kudos not only to the Legislature but to the governor who in many ways stood behind it.

Miro: Yes, Keli‘i Akina, president and CEO of the Grassroot Institute of Hawaii, Grassroot Institute of Hawaii, grassrootsinstitute.org, grassrootinstitute.org for more on that. We’re going over the 2024 legislative session. A lot of great news as you just heard coming out.

There was another big tax cut this year, Keli‘i. It’s one all of you folks who just mentioned a grassroots institute you’ve advocated for years. Now signed by Gov. Green, it would exempt private practice doctors and dentists from having to pay the state general excise tax for care covered by Medicaid, Medicare, TRICARE. Could you tell us a little bit more about that and how it will affect Hawaii residents?

Akina: This was really a big win for Hawaii’s residents, especially because of the difficulty of private practice doctors to stay in business or to be attracted to come to Hawaii. And everyone is learning about the shortage we have in doctors.

Your lawmakers passed SB1035 to remove the general excise tax on medical bills for patients with Medicaid, Medicare, and TRICARE health insurance. This applies to both medical and dental practices and should lighten the tax burden on both patients and healthcare providers.

At Grassroot Institute, we wrote a report called “The case for exempting medical services from Hawaii’s general excise tax.” In that report, we detailed how GET is a significant expense for doctors’ offices, making it difficult for such practices to thrive in our state.

For example, did you know that Hawaii is the only state to tax gross receipts on patient co-payments and deductibles, as well as the only state to tax Medicare and TRICARE? That’s the distinction we really don’t wanna have. 

Nonprofits like Queen’s and Kaiser are currently exempt from the GET, but private practice physicians are not.So that means private practice doctors and clinics must pay the state’s 4% GEP plus any county surcharge. 

Now you may be saying. they can pass the GEy onto their patients, like parking tickets, but they actually cannot. As explained in our report, the tax cannot legally be passed on to TRICARE or Medicare patients, which forces doctors to absorb those costs entirely, or choose not to see these patients at all. So this was really a good move on the part of the Legislature.

Miro: Good to hear. Also related to healthcare, I know Grassroot had a hand in the Interstate Medical Licensure Compact. That’s for doctors, that one was enacted into law last year. Now were there any bills similar to that for other medical professionals this year, Keli‘i?

Akina: Well, sort of. We didn’t get everything we wanted, but we did get something. Lawmakers unfortunately weren’t able to pass the Nurse Licensure Compact, which would have made it easier for nurses that are already licensed to move here without needing a Hawaii-specific license.

Now, while that bill died at the last minute, there’s still hope that another bill will make it easier for nurses to get a temporary license so there’s less interruption. 

Many groups, like the Healthcare Association of Hawaii and Queen’s Hospital System and the Hawaii Pacific Health and Kaiser Permanente Hawaii worked very hard to get this bill through.

In addition, both legislative health committee chairs, that’s Sen. Joy San Buenaventura and Representative Della Au Belatti, were great advocates not only for the temporary license solution but also for the compact proposal.

Miro: And the lack of affordable housing, the options, it’s long been identified as a driver of the high cost of living here in Hawaii. Now, were lawmakers able to do anything to address that issue, Keli‘i?

Akina: Lawmakers did a lot this year, specifically passing SB3202 and HB2090 this year. These are very different approaches from years past. Recent past attempts to address the state’s housing shortage primarily involved subsidies for affordable housing construction.

Many other states are looking at zoning as one of the barriers to housing development, and we agree at the Grassroot Institute. We even created a report back in December of 2023 that outlines all the different potential zoning reforms that legislators can take on.

First, let’s talk about SB3202. The zoning measure requires the counties to allow two additional dwellings on each residentially zoned lot with the aim of promoting higher density development. This is called the ADU bill. That’s remarkable. That means you can have two units in addition to the primary residence on your lot.

You could use one for your children when they grow up and one of them gets married and wants to move in as they earn their own mortgage. Another one for grandma and grandpa. This is very important in being able to satisfy our housing needs. Or you could rent one out.

Next, HB2090 makes it easier to convert empty office space or retail space into housing. That’s what we call adaptive reuse. This will create more livable, walkable communities that have been missing from our housing ecosystem, and it will help address the supply-side limitation.

So instead of these buildings that are starting to get empty in downtown Honolulu or other urban areas, we can start converting them into residences. And that’s going to be good for the community as well as for the safety and the culture and nightlife, really, in these parts of town.

Miro: Do they still have to work out the windows that don’t open in a lot of these businesses, the towers, Keli’i? Because that was a big issue down there with Davies Pacific Center, right?

Akina: In the beginning of the move to transition buildings from office to residential, one of the problems pointed out was that every single bedroom needed to have a window. But creative design has made it possible to be able to provide very suitable living spaces where you don’t have to have windows in every single bedroom, and we were able to accommodate that in the law. So this is a big forward move for being able to supply housing needs.

Miro: Great news. All right. I know government transparency and corruption were major issues this year. How did measures related to those issues fair?

Akina: Well, as you know, we have a special place in our heart at Grassroot Institute for keeping government accountable. Our governor, Josh Green, recently signed a few good-governance bills into law. We’re really pleased about that. This furthers the state’s commitment to accountability and transparency in government action.

These bills — part of ongoing efforts to promote public trust and citizen participation — aim to enhance openness in decision-making processes across Hawaii. 

Now, amongst the bills signed include House Bill 1598 and 1599 and 1600. They focus on bolstering Hawaii’s open- meeting laws. They seek to facilitate greater public input by ensuring timely distribution of written testimony to board members — that’s HB1598 — and allowing audio and video participation in remote meetings — that’s HB1599 — and setting clear time standards between board meetings — that’s HB1600 — these enable adequate review and compliance with open-meeting-law requirements.

Lastly, I’d like to point out that House Bill 2072 promotes transparency in disaster-relief fund solicitations by requiring disclosure, safeguarding donors and fostering confidence in relief efforts. 

So all in all, this was a good menu of bills that advanced the state of transparent and open government in Hawaii, a win for the people of Hawaii.

Miro: And the big question is, how long does the governor have to decide now whether to veto or sign all these bills?

Akina: Our governor has to take action on any bill now by July 10th. So mark that on your calendar.

If he signs the bill, the bill obviously becomes law, and then it’s given an act number. It doesn’t mean the bill is implemented immediately. Bills have calendars and timetables as to when they ultimately get enacted.

Now, if Gov. Green plans to veto a bill, he must inform the legislature by June 25th. And actually, he has to deliver the veto by July 10th. So if the bill is vetoed, it won’t become law unless the Legislature successfully overrides the veto by a two-thirds vote in each chamber.

If our governor chooses to do nothing on a bill by the July 10th deadline, the bill will automatically become law without his signature. 

So if there’s something that you support or oppose, right now is the time to reach out to the governor and let him know what you think about how he should vote on any given measure. 

Miro: But it sounds right now you’re giving this a high grade despite the signing not happening until July. You’re giving us pretty high grades overall.

Akina: Yes, because a good amount of the Legislature involves the governor’s own endorsement. For example, the tax measures, which are historic in terms of reducing the tax burden on Hawaii’s people, is something that Gov. Green even called the Green tax plan.

And this is very important because these measures have had the governor’s support during the legislative session. So it’s not likely — and this is just my opinion — but it’s not likely that he’s going to reverse his stand on these bills. 

So we’re waiting, but at the same time, we don’t want to count our chicks before our eggs hatch. And so there’s a lot of drama, perhaps, in the next few weeks. And part of that is letting the governor hear from citizens how they would like him to vote.

Miro: A great breakdown, and easy to understand, of the 2024 legislative session that is now complete. We’ll see what takes place. 

Keli‘i, how can people find the work at Grassroot Institute?

Akina: You can read all about these bills and the issues related to them, whether it’s housing or taxation or medical costs, at the Grassroot Institute website. You can also go to the website and sign up for our free weekly newsletter, which informs. It’s a great source of information; it informs citizens about all these issues.

The address to go to is grassrootinstitute.org. That’s grassroot. There’s no “s” after grassroot. It’s grassrootinstitute.org. Sign up there and we’ll be glad to stay in touch with you every week.

Miro: Appreciate your time so much. Keli‘i Akina, president and CEO of the Grassroot Institute of Hawaii. Enjoy the rest of your Sunday and we’ll talk to you again soon.

Akina: Have a great rest of your Sunday too, Johnny. Aloha.

Miro: Aloha.