Kefalas hits highs and lows of 2025 legislative session at halfway point

from Grassroot Institute of Hawaii

The Hawaii Legislature has reached its halfway point — the critical crossover deadline when bills pass from one chamber to the other — and many promising bills in the areas of housing, taxation and economic freedom are still alive.

Ted Kefalas, the Grassroot Institute of Hawaii’s director of strategic campaigns, joined radio host Johnny Miro on Sunday to discuss those measures and others that unfortunately failed to meet the mid-session deadline. 

Positive housing-related proposals that remain in play include:

>> SB1296, which would expedite Maui fire recovery by exempting certain Lahaina properties from needing to go through the costly and time consuming process of obtaining a Special Management Area permit in order to rebuild.

>> HB422, which would repeal school impact fees charged to homebuilders that get passed on to homebuyers and haven’t even ever been used by the state Department of Education to pay for school upgrades or new construction.

>> SB66, which would require Hawaii’s counties to approve building permits within 60 days.

>> HB1409, which would encourage homebuilding in transit-oriented development zones.

Kefalas also noted that there are a range of bills still alive that are aimed at reforming the State Historic Preservation Division’s historic review process.

Regarding taxation, Kefalas said it’s good news that SB1043 is still alive, because it would eliminate the state general excise tax on groceries and non-prescription drugs. It’s concerning, however, that SB1396 is still alive, because it proposes increasing the transient accommodations tax rate by approximately 17%, from 10.25% to 12%.

Kefalas said it’s also unfortunate that lawmakers abandoned SB1081, which would have advanced government transparency by requiring an independent source to analyze the financial impact of proposed legislation. 

On the positive side, however, Kefalas noted that lawmakers are still considering SB1065, which would remove degree requirements for many state jobs, prioritizing hiring based on skills and experience rather than formal education.

And finally, Kefalas highlighted SB1620, which would remove the state’s requirement that natural hair braiders obtain costly cosmetology licenses that don’t even teach hair braiding. 

“There’s still a long road ahead,” Kefalas said, “but we are really excited that these bills are still moving and think that they are important steps in the right direction.”

Kefalas noted that “there is still some time to get involved and have your voice heard on any of the issues that we’ve talked about today,” and you can do that by visiting grassrootinstitute.org/action.

TRANSCRIPT

3-9-25 Ted Kefalas on Johnny Miro

Johnny Miro: All right, happy to have you along this Sunday morning. Once again, I’m Johnny Miro. Time for another public access programming here in our five Oahu radio stations and five Kauai radio stations. 

We’re also available via your smart device at HawaiiStream.FM and Live365, another way to pick up all of our H. Hawaii Media radio stations. 

It’s that time of year again. The 2025 legislative session is already pretty much halfway through, and we’re approaching a crucial deadline known as crossover. It’s not a basketball term, a crossover dribble, but crossover as far as the legislative session is concerned.

So joining me today to discuss this is Ted Kefalas, director of strategic campaigns at the Grassroot Institute of Hawaii. I’d like to get all of their insight whenever possible. Grassroot is a nonpartisan public policy think tank based here in downtown Honolulu. 

Ted spends much of his time closely monitoring the bills making their way through the House and Senate. Now, somebody has to do it, and Ted enjoys it very much. So he’s here to offer some insight into what lawmakers are working on. 

But before we dive into the specifics, Ted, let’s just start with some basics. OK, can you explain — obviously, I made a little pun on crossover — what crossover is and why it’s such an important milestone in this legislative process?

Ted Kefalas: Yeah, well, thanks for having me, Johnny. It’s always a pleasure to be on the show. 

I loved your analogy on crossover, but it’s one of the most important milestones in the legislative process, and it’s when bills move from one chamber of the  Legislature to the other. 

So, for example, a bill that starts in the House has to make its way now through the Senate and vice versa. This is a pivotal point in the session because it determines which bills are going to continue moving forward and which ones may fall by the wayside. 

So, to kind of help explain it, I like to think of it almost like a relay race. Imagine you’ve got like a team of runners and each runner represents a different chamber of the Legislature. 

The first runner — let’s just say in this case, would be the House — they run part of the race, you know, overcoming various hurdles, things like committee hearings and different debates. Once they’ve made it through those, they then pass the baton, or the bill, if you will, to the second runner, which would be the Senate in this case. 

Now, for the race to continue smoothly, that baton has to be handed off successfully on time. If there’s a delay or a misstep in the process, the race can stall out and the bill essentially fails for the year.

So, crossover week is often a flurry of activity. Bills are really rushed through the last committee and floor votes to make sure that they meet that deadline, and it’s really an exciting time at the Legislature. 

But I want to give a little bit of a perspective on the scale of this process, if I could. 

There were over 3,100 bills that were introduced in January. Now, as we’re reaching crossover, we have fewer than a third of those bills that are still alive. And the reason for that is largely due to this crossover deadline. 

Like I said, if a bill doesn’t make it through the first chamber in time, it’s pretty much dead for the session. So it’s really critical for lawmakers to get things moving, and we’re paying very close attention to which bills make the cut.

Miro: So two-thirds of the batons have basically been dropped on their way through this process. OK. 

The Grassroot Institute has been focusing on several key issues this session, and I’d like to touch on a few of them, Ted. Like, obviously housing. Housing is massive. What are some of the major housing reforms you support and that have gained traction in this legislative session?

Kefalas: Yeah. Well, as you mentioned, Johnny, you know, the Grassroot Institute, we are focused on public policy research, and one of our top priorities is lowering the cost of living here in Hawaii. And I think that’s especially important since so many families are feeling the strain. 

A major driver of that cost of living is the cost of housing, and we’re actively working to pass a number of bills this session that can help increase the supply of homes and make it more affordable for everyone.

So one of the key things that where we’ve been focusing on is reducing unnecessary regulatory burdens that are slowing down housing development. 

For example, we’re supporting a few bills that would provide an exemption for properties in Lahaina from needing what’s called an SMA permit. That stands for Special Management Area. 

This is just an extra review process that adds time and cost for properties near the shoreline. And funny enough, almost all the properties in Lahaina are considered in that SMA zone. So they would have to go through this process, and there are a few bills that would expedite that and exempt a lot of these properties from having to go through those hurdles. 

And that’s important because we want to try to expedite, you know, efforts — the rebuilding efforts for those that have lost everything in the fires.

Another important bill that we’re backing is HB422, which would repeal school impact fees. These are fees that are charged to developers, but interestingly, you know, they’ve never actually been used by the Department of Education for building new schools. The only thing they seem to really do is add to the cost of housing. 

We’re also supporting SB66, which would establish a permitting shot clock. As everybody knows, it can take a lot of time to get the necessary permits to build new housing, and this bill would require counties to essentially grant building permits in 60 days. I mean, can you imagine, Johnny, if you were able to get a building permit in 60 days? That’s unheard of.

On top of that, we have been advocating for HB1409. That’s a bill that’s focused on transit-oriented development. So it really is trying to promote building more homes around public transit like the rail. 

It was our thinking as we spent so many billions of dollars on the rail, and we weren’t necessarily in favor of it, but the rail’s not going anywhere, so we need to make sure that we utilize it. That means building more housing. And it’s important that we start doing this now so that these homes, you know, that they can be built by the time the rail is fully operational.

There’s a lot more that I could talk about, but the last one I’ll focus on is sort of, kind of another theme that we’ve seen. There are a range of bills aimed at reforming the State Historic Preservation Division and the historic review process. 

So currently, any property built before 1975 is considered historic and has to go through an additional review process. As you can imagine, that just adds more time that we don’t have, not to mention, you know, not everything that’s old is historic. 

So, you know, ultimately we’re looking to just reduce a lot of these regulations and help lower the cost of housing developments and increase our housing supply to help tackle the current crisis in Hawaii.

Miro: Going back to that HB bill, about the schools, a fee for that, and you said it’s not even utilized to build schools, so if you get rid of it and it’s been collected all these years, where’s the money?

Kefalas: [chuckles] Yeah, that’s a great question. I mean, school impact fees, like I said, you know, they’re charged to homebuilders to fund the construction of high schools. And that kind of makes sense, but the problem is those fees are just sitting there collecting dust. You know, they, for example, they just drive up the cost of housing. 

So, for example, we talk about the Ala Moana, like, Ward area here in Honolulu. That costs about $4,000 per unit just for school impact fees.

Miro: Wow.

Kefalas: And the reality is this doesn’t really affect developers. It’s getting passed on to homebuyers, and that’s resulting in higher prices and higher rents. 

Just to kind of give you a real life example: Back in 2022, Howard Hughes had to pay over $2 million in school impact fees for one of their condos in Ward Village. Those fees were directly passed on to the buyers as part of their closing costs. 

And, you know, as I mentioned, you know, these fees aren’t being used to build new schools. Right now there’s about $21 [million], $22 million sitting unused in these accounts, but that’s only about a quarter of the cost to build a new elementary school here.

We absolutely support our schools and of course the keiki that need access to quality education, but the reality is these school impact fees are ineffective. They increase the cost of housing and they’re not meaningfully addressing the issue of school capacity or directly funding the construction of new schools. 

So, like I said, they’re just kind of sitting there in an account, and it not only makes the system inefficient but unfair to local families who are already struggling with high housing costs.

Miro: Well, if the people didn’t know about that, they sure do now, so we’ll see if there’s any uproar. That’s incredible.

Tthe impact fees, are there any other impact fees that we should know about, and how are they impacting housing, or did you pretty much cover all the bases right there?

Kefalas: Yeah, I mean there are a few other impact fees, but I think that the biggest one really is schools because you have that they’re not being used quite frankly. And there is an opportunity, I think there are a lot of folks that have identified this as a barrier to housing. Not to mention, you know, if you are somebody that wants to put in an ADU in your backyard, you may be subject to these sorts of impact fees.

Miro: OK.

Kefalas: So, you know, just trying to make it as easy as possible for people to contribute and add to our housing supply.

Miro: All right. Ted Kefalas with Grassroot Institute of Hawaii. And another area of focus for the Grassroot Institute is taxation — taxation and government spending. 

Are there any significant tax hikes being proposed? We know we have the tax break that just kicked in. Well, should people be aware of any? And on the flip side, are there any tax reductions in the works?

Kefalas: Yeah. Yeah. Well, let me start with kind of the good news, and then we’ll cover some of the more concerning proposals. 

First, you have SB1043, and that would essentially eliminate the GET, the general excise tax, on groceries and non-prescription drugs. This is a bill that Gov. [Josh] Green ran on a few years ago, and unfortunately, it just keeps getting shot down in the past by the Legislature. 

But the good news is that this year’s bill is still alive, and if passed, you know, it’s going to immediately lower the cost of food, which is especially important during a time when inflation is making everyday essentials harder to afford. Eliminating the GET on groceries and non-prescription medications, I think is a great step in the right direction to help local families continue to manage their budget. 

Now, kind of let’s talk about the bad news. There are some proposals that could raise taxes, and we really need to be careful about the long-term impact of those. 

One of those proposals is to increase the transient accommodations tax, the TAT tax, as well as the introduction of Gov. Green’s, what they’re calling the “green fee.” Both of them are taxes on tourists. And believe me, I understand the want to go after the tourists. But before we move forward with yet another increase on our, tax increase on our visitors, I think it’s really important to pause and seriously consider the consequences. 

You know, we — it’s understandable to kind of have that impulse, but we need to recognize that Hawaii is already the most heavily taxed tourist destination in the world. I was recently reading an article by Money, which is a UK-based website, and they mentioned that Honolulu tops the list when it comes to high tourism taxes. 

So, we’re already charging visitors more than any other destination on the planet just for the privilege of staying here. If we continue raising taxes on those visitors, I think we really seriously consider or risk pricing ourselves out of the market.

Tourists have plenty of other options where they can spend their vacation dollars, and they may start soon choosing other destinations. So, it’s not just the hotels that are going to feel it. It’s our small businesses, our restaurants, our tour operators, and workers all across the entire economy will be hit as well.

Miro: All right. Also Ted, one of Grassroot’s ongoing priorities is increasing government transparency. So, what’s the outlook for some of the bills aimed at making Hawaii’s government more transparent?

Kefalas: Well, I wish I had better news for you, Johnny. We’ve been closely following several bills that would aim to make Hawaii’s government more accountable to the people. But one — you know, one such proposal was a fiscal notes bill. 

Fiscal notes are a tool that provides kind of a detailed breakdown of the financial impact of a bill before it becomes law. So, by requiring an independent source to analyze the consequences of, you know, proposed legislation, these fiscal notes give lawmakers, as well as the citizens and the public, the transparency they need to understand how a bill will affect public finances. 

This kind of analysis forces lawmakers to consider the real-world cost of the policies they propose. And it allows people to see the kind of ramifications of a bill, so that everybody is in a better position to make informed decisions. 

Not to mention, we’re the only state in the country that does not have any sort of fiscal notes right now.

Another bill that we supported is one that would eliminate vacant positions after four years. This bill would have addressed an issue where — many government departments, they hold onto these vacant positions for years, essentially using the budget allocated for those positions as sort of a slush fund, and they have no intention of hiring anybody. This practice allows the department to spend, you know, that money without any sort of oversight or accountability.

Miro: Wow.

Kefalas: Now, both of these bills died, unfortunately, which is a step back, I think …

Miro: Yeah.

Kefalas: … for more transparency and responsibility. But we are dedicated to continuing to fight for these as well as other changes that would help bring more transparency and accountability into our government.

Miro: I think you also mentioned that it’s kind of, it costs pretty much a good dime to be able to get documentation. The cost of getting information has been mentioned a couple of times. Is there any movement to try to make this a little less constantly on people looking to get some information from the government?

Kefalas: There was a bill to essentially cap the amount or the cost of when groups like ourselves or others formally request a UIPA [Uniform Information Practices Act] request to get information from the government. A lot of times we’ll be charged, you know, thousands of dollars in order to get those documents reproduced. And there was a bill to cap those costs, but unfortunately that also died.

Miro: OK. They want to make sure folks are spending a lot of money to get the information that you’re looking for. All right. All right. 

Have there been any other major surprises or disappointments regarding bills that just didn’t make it through the process, Ted?

Kefalas: Yeah, I, you know, this session certainly has had its ups and downs, but I think there are still some promising bills that are alive. 

One of those is SB1065, which would remove degree requirements for a lot of state jobs. Right now in Hawaii, bachelor’s degrees are often required for a lot of state positions, even when the job doesn’t necessarily need that level of education.

So, you know, this requirement limits the pool of qualified candidates. It leaves out people with the right skills and experience just because they may not hold, you know, a college degree. 

Several states, including Maryland, Utah, Pennsylvania and I think Alaska as well, they’ve already passed similar measures and, you know, it’s time for Hawaii to do the same. 

So this bill, SB1065, would allow state agencies to hire based on skills and experience rather than formal education. And I think that’s a great first step.

Miro: Yeah.

Kefalas: Another one that we’ve seen moving is SB1620, and that would exempt natural hair braiders from unnecessary state licensing requirements. 

Under the current law, hair braiders in Hawaii technically have to get a cosmetology license. But, like, that cosmetology license, a lot of times, costs upwards of $21,000, it requires about 1,800 hours of training, but they don’t actually practice any sort of hair braiding in that license.

You know, many of these braiders are women from minority communities, and braiding is a traditional cultural practice. So, you know, we want to look for ways to exempt braiders from these unnecessary requirements. And SB1620 would do that, and I think opens up some more entrepreneurial opportunities and removes a lot of the roadblocks that currently hold people back from opening and operating their own businesses.

So there’s still a long road ahead, but we are really excited that these bills are still moving and think that they are important steps in the right direction.

Miro: All right. We’ve been discussing the legislative session, which is already halfway through, approaching a crucial deadline that is crossover, with Ted Kefalas of Grassroot Institute of Hawaii, the director of strategic campaigns. 

And looking ahead, Ted, what can we expect for the remainder of the legislative session? There has to be a timeframe on this now, right?

Kefalas: Yeah. Yeah. Well, we’re in the home stretch of the legislative session, and we’re getting closer to the final days. You know, we’ll start seeing probably more and more worthy bills die. But we’ll know which bills have officially passed in less than eight weeks. 

The last two days of the session are May 1st and May 3rd. So, you know, all bills have to make it across the finish line by then. That means there is still some time to get involved and have your voice heard on any of the issues that we’ve talked about today.

And I want to encourage your listeners to visit grassrootinstitute.org. And if they go to grassrootinstitute.org/action, they can actually take immediate action on a lot of these important things that we’ve discussed — everything from housing to taxation, to government transparency. It’s a great way for people to actively participate and help us to push for some positive change here in Hawaii.

Miro: All right. So, can you repeat that? It’s grassrootinstitute.O-R-G and they go to what tab?

Kefalas: Yeah, so it’s grassrootinstitute.org. That’s dot O-R-G.

Miro: Yeah.

Kefalas: And you can go to our “action” tab action to get involved, or if you just type in grassrootinstitute.org/action, that’ll take you right there to our page with multiple different issues where you can directly contact your state Legislature and just read a little bit more background and get more engaged with everything that’s been going on.

Miro: He gives you all the information you need because he goes to those, the House and the Senate, and he sits through it all. So, Ted Kefalas, director of strategic campaigns, we’ll see what comes out of this, and hopefully discussing the results, I guess close to June or so. When that’s all said and done, the governor might send, sign, I should say, or a veto. 

But in the meantime, great information, and wish you all a great Sunday, the remainder of your Sunday. We’ll be talking to you soon, OK?

Kefalas: Thank you, Johnny. Appreciate the time, and always a pleasure getting all this information out to the listeners.