Akina calls results of 2024 legislative session ‘delightful’

The Grassroot CEO tells radio host Johnny Miro that tax cuts and removing an emergency power were among the highlights

from Grassroot Institute of Hawaii

It’s rare that the word “delightful” is used to describe a legislative session, but that’s exactly how Grassroot Institute of Hawaii President Keli‘i Akina characterized the recently concluded 2024 session. 

Speaking on Sunday with Johnny Miro of the H. Hawaii Media radio network, Akina highlighted the session’s major achievements and a last-minute surprise from Gov. Josh Green, who had until July 10 to act on the bills.

Among the governor’s unexpected approvals praised by Akina was HB281, which, despite being initially on the veto list, now prevents governors and mayors from suspending electronic communication during emergencies.

“Back during the pandemic under Gov. [David] Ige, access to certain information was just cut off and, media didn’t have that. And the public found that they couldn’t necessarily get the kind of information they needed to really see what was going on in the government,” Akina explained. “This bill was designed to remedy that.”

Akina also commended the governor for exercising his line-item veto power to trim excess spending in the budget by $74 million. 

Additionally, Akina lauded the historic income-tax cut, noting that a family of four with the median income of $88,000 will see its tax burden decrease from $5,000 today to $1,400 in 2031.

“Here’s the bottom line,” Akina said, “Hawaii goes from being the second worst state for that family to one of the best states in terms of taxation.” 

Akina addressed concerns from critics who argue the state budget can’t sustain the tax cuts without reducing critical services, citing an economic concept known as the Laffer curve.

“By cutting taxes in the front end, government is allowing citizens and the economy to grow so that the actual taxes collected at the tail end are far more,” he explained. 

TRANSCRIPT

7-21-24 Keli‘i Akina with host Johnny Miro of H. Hawaii Media radio network

Johnny Miro: Good Sunday morning. I’m Johnny Miro, and it’s time for our Sunday morning public access programming on our five Oahu radio stations of H. Hawaii Media, along with our five H. Hawaii Media stations on Kauai. Hawaii-stream.fm. Live 365, another way to pick us up via your smart device. Joining me once again will be a member of the Grassroot Institute of Hawaii. 

The last bill has been signed or vetoed so we can finally close the book on the 2024 legislative session as we’ll be talking about vetoes and signings by the governor. It was a very busy session.

Early on, a lot of focus was on the state finances and how to rebuild Lahaina. However, there were also some very interesting proposals on taxes and housing that grabbed a lot of headlines. So, we’re going to find out what the final verdict is. Should we give the governor and the Legislature a good grade for the year?

So joining me today is Keli‘i Akina, president of the Grassroot Institute of Hawaii. Grassroot is always very active in the Hawaii Legislature and they don’t pull punches when it comes to evaluating the work of our elected officials. 

So Keli‘i is going to walk us through some of th highlights of this years session and help us decide whether we should be happy with the results.

As the governor wrapped up the 2024 legislative session, Keli‘i, a few last minute signatures and vetos. Were there any surprises there in your opinion? 

Keli‘i Akina: Well, yes, there were, but they were delightful surprises. But before I get into it, Johnny, let me just greet you and your listeners. What a wonderful program you have, and we’re delighted to be part of it.

But the best news was that Gov. Green signed HB2581. This bill basically prevents governors and mayors from suspending electronic communications in an emergency. And that’s very, very crucial.

The Grassroot Institute and a bunch of other organizations supported the bill during the session because it prevents the unconstitutional suppression of free speech during emergency. 

Remember back during the pandemic under Gov. Ige, access to certain information was just cut off, and media didn’t have that. And the public found that they couldn’t necessarily get the kind of information they needed to really see what was going on in the government. Well, this bill was designed to remedy that. 

But here’s the drama behind it: [The] governor originally put the bill on his intent to veto list, and so that jeopardized the bill. But eventually, he changed his mind, and he signed the bill after all. 

I think that, basically, the governor had the right thinking and it just took a few people from the public to communicate the concern about making sure that this bill went through and then he did so. He signed it. 

So [the] governor also used his line-item veto to trim the $74 million from the budget and reduce spending on other bills. 

So, to answer your questions, was there anything surprising or delightful about the vetoes? Yes indeed. So we’re very, very pleased. 

Miro: It’s surprising to hear that particular one about broadcast communications during emergencies, he needed to be nudged to go in the right direction. I just can’t for the life of me figure out why there would be no immediate signature on something like that. 

Keli‘i, what would you say is the biggest win of this year’s session?

Akina: Well, Johnny, it was a big win indeed. We’ve had the largest income-tax cut in the history of the state of Hawaii. And as a result, taxpayers can now save as much as $5.6 billion through 2031.

This thing is not just symbolic — it will actually lower the cost of living. And the biggest beneficiaries of the tax cut are the ordinary working residents. 

Right now, for example, a family of four making the median household income of $88,000 has to pay every year in taxes approximately $5,000. By 2031, that figure is going to drop to $1,400.

So here’s the bottom line: Hawaii goes from being the second worst state for that family to one of the best states in terms of taxation. 

And if you want to see this as it applies to your own situation, Grassroot has a tax calculator on our website and we’d help you to determine how much you can save with the tax cut. That’s at www.grassrootinstitute.org.

Miro: And that’s coming in 2025, so it won’t be immediate, won’t be immediately filled, but it’s going to come around in 2025, right?

Akina: Right and it will be expanded as the years go on.

Miro: OK, Keli‘i, a lot of people are suggesting that the state budget can’t sustain this big tax increase. Are they correct? And should they worry about the future of the tax cut?

Akina: This is a very important discussion because a lot of times, individual citizens as well as public office holders make decisions and form opinions on the basis of feeling. And you might feel that if government is going to raise less taxes, cut tax rates in particular, that government is going to get less money and people are going to have fewer services but that’s not how it works out.

I’ll tell you why economically in a few moments but for one thing, based on current revenue projections, Hawaii can afford the tax cut as long as we don’t raise our spending terribly. The Hawaii Council of Revenues predicts $9.5 billion this year, 4.8% growth next year, and growth between 3.5% and 4.5% for the rest of the decade. Those are outstanding figures.

This means that revenues are expected to be approximately $12 billion in 2030. So even capturing in tax cuts, there should still be $11 billion remaining to take care of all the state’s obligations and the need to fit it. This does mean that the state should be restrained in its spending, but that’s a good goal.

That’s very important because better government, more efficient government is when government is spending less money. 

Now, Gov. Green trimmed a billion dollars from the budget last year and $500 million this year while still insuring a $1.5 billion dollar rainy day fund. 

Now, we should also remember that the tax cuts can help us grow the economy and this is the point I was trying to make at the beginning. When the taxes are cut for citizens, ordinary citizens spend more money.

They go to restaurants, they go to movies, they buy things, and businesses prosper. And when businesses prosper, they make money and invest more money back into the growth of their businesses. The net result for government in terms of taxes is that government actually collects more taxes because the economy is better. 

And so, by cutting taxes in the front end, government is allowing citizens and the economy to grow so that the actual taxes collected at the tail end are far more, far greater.

And that’s an exciting principle. It’s called the Laffer curve — an economic concept that’s been seen all over the country and all over the world. So congratulations to the governor and the Legislature for finding a way to relieve the heavy heavy tax burden on Hawaii citizens and still be able to raise enough funds to meet the needs of the state.

Miro: All right, joining me is Keli‘i Akina, president of the Grassroot Institute of Hawaii. Keli‘i, tax cuts weren’t the only major reform passed this year, and I know that you are very involved with the housing reforms too. Is Hawaii finally going to make progress on that issue?

Akina: Oh, absolutely. We’ve been at a stalemate, kind of, in terms of moving forward with providing more housing to people in need. And part of the reason is that government officials often simply pursue various individual plans and programs, but don’t deal with underlying causes.

And the underlying major cause for our lack of housing in Hawaii is the level of government regulation. And there are regulations galore that prevent us from doing things that are being done all over the nation that supply housing.

Two major housing reforms were passed this year and signed by the governor. We’re really excited about them. One helped clear away the barriers to building ADUs. These are accessory dwelling units. These are attached or near the main house. Your children can live in them. Your parents can live in them. You can rent it out. This is an ADU. It requires now, I mean the law passed requires that the counties permit at least two ADUs per lot.

Now, that’s huge because that means the supply of housing in some areas can readily triple. There are a lot of rules and regulations that make it hard to build these small units now. So we really praise the Legislature for that. 

The other thing the Legislature did was to make it easier to build accessory units, to create more rental units, and that’s going to help the housing crisis most definitely. 

Now, the other bill that will help encourage more housing is called the adaptive reuse bill.

Adaptive reuse is when you take a building that was formerly used for another purpose, like an office building or a retail space, and then you convert it into residential. It’s less expensive and easy which ultimately benefits the new homeowners. 

Grassroot worked with a large group of housing advocates on both of these bills. And the fact that they passed shows that Hawaii is ready to become a national leader in housing reform. So this is going to be so helpful to the people.

Miro: All right. Overall, it seems like a very productive session, Keli‘i. Were there any disappointing results for you in the governor’s final actions?

Akina: Well, even in a session when there are so many victories for the folks, there are also some setbacks. One of the disappointments was the governor’s veto of HB1633, which is called the owner-builder exemption. This bill would have let homeowners who build or improve structures on their own land lease those new residences to someone else within the first year.

You see, right now here’s the problem: The law doesn’t let owner-builders rent those structures for a whole year after construction. And that’s a lot of money wasted before you can actually rent out your property.

The rationale for this veto was put in terms of public safety. Those arguing that we should’t provide the owner-builder exemption argued that we needed to wait a year to see whether the building was safe. But that doesn’t make sense because at the front end, the permitting process determines whether the design is going to be safe.

So we had hoped the governor would change his mind on vetoing this bill because it complements the other housing reforms like the ADU bill, but that didn’t happen this term.

Miro: All right, so they’re still going to have to wait that one year to go through before they can rent out anything that they did work on.

Akina: That’s still the case.

Miro: OK, now, finally, are there any other notable wins to come out of this year’s legislative session, Keli‘i?

Akina: Well, we can switch to the health care front. Most people know that we’ve been facing a shortage of medical personnel, doctors, nurses, and others, and this year there were some bills that are going to help ensure that we actually maintain and grow our supply of medical personnel. That’s going to be good for everybody.

The GET exemption for doctors and dentists providing medical services through Medicare, Medicaid and TRICARE will be very important because now they won’t be taxed through GET on a very large profit that these doctors get. This is going to make it easier for private practice doctors to stay in Hawaii.

Anything that helps to reduce the physician shortage also helps patients who sometimes struggle to find doctors and specialists. 

Temporary permits allowing out-of-state nurses to practice in Hawaii was another win at the Legislature. And hopefully, this is a step toward joining a permanent nursing compact where we can [inaudible] the nursing credentials of practitioners from other states. And again, that will help address the nursing shortage.

There’s another win, and this is for small business in particular, what we like to call the cottage food bill. It was intended to make it easier for local small food producers working out of home kitchens to sell their goods like jams or cookies, other items for baseball games and so forth. Ultimately it’s up to the Department of Health to set the regulations but it’s the victory for food freedom in Hawaii. 

Overall, a very good session.

Miro: Ran down the list of things. Thanks so much for that information, Keli‘i, the president of the Grassroot Institute of Hawaii. How can the listeners find your work at your website?

Akina: We welcome anyone to sign up for our free weekly newsletter. It comes out at the end of the week. It’s filled with information about our laws, our state government, and things that are going on that are good, and things that are being changed from bad to better, and just really a wonderful source of information about the economy and about living a better life here in Hawaii through a more prosperous economy.

And now you can get that by going to www.grassrootinstitute.org. That’s grassrootinstitute.org. Everyone is welcome.

Miro: Keli‘i, appreciate it once again for spending some time with the audience. Enjoy the rest of your Sunday. We’ll be talking to you soon.

Akina: You take care, Johnny and aloha.