Economic Misfortune Can Fix Our “Shadow Budget”
In recent weeks, we have been reporting on Hawaii’s “shadow budget.” We found out that a first responders’ campus in central Oahu, even when a bill to create it was stomped on, shaken violently, and killed in the House, could still be funded via the State’s budget bill due to some behind-the-scenes machinations involving the powerful chair of the Senate Ways & Means Committee. That, however, may change because of some misfortune. In the most recent meeting of the State’s Council on Revenues, economists came back with a more dire forecast for Hawaii‘s economy, lopping a cool billion dollars off the State’s forecasted revenues. In response, Governor Green just did something very unusual. He met with legislative leaders, including the senator we mentioned above, and told him that he intends to line item veto parts of the budget bill in order to accommodate the billion dollars that we’re not going to get. Our Constitution, after all, requires that our budget be balanced. This was unusual because the Governor still has quite a bit of time before the deadline to notify legislators of bills he plans to veto. And even if he didn’t line item veto the budget, he certainly has the authority to withhold funding for items in the budget given that some of the income on which the budget was based is not going to materialize. So our Governor had a weekend meeting with this powerful senator and said, “Look, we need to invest in established state priorities, such as housing, homelessness, health care, and the environment, and here you have a $50 million project for first responders but our Honolulu Police Department, who ideally should be one of the prime users of this project, has said they don’t like it and won’t participate in it. So, that project is going to be line item vetoed. But we’ll find other ways to modernize the State’s emergency response facilities.” The good Senator issued a statement recently saying that he understood where the Governor is coming from. Perhaps that means he is plotting revenge later but realizes he can’t do anything now. Could the Legislature override the veto of the budget bill? That would be extremely tough given that the Senate would need the House to vote to override as well. Further, even if the override did occur, the budget would then be out of balance, and the Governor could restrict funding for certain items at his discretion to make the budget balance. Thus, funding for the first responders’ center still would not happen. In the meantime, the Governor is also taking sensible steps such as line item vetoing $500 million out of the $1 billion that the budget bill would add to our rainy day fund. Adding $1 billion to the fund, which sits in a bank somewhere waiting for an emergency to happen, would be questionable even if we had the spare cash given that we have current uses and needs for that money. Now, with the downbeat economic forecast, it’s questionable whether we even have the cash to spare. Other significant proposed reductions include funding for teacher housing, reduced from $170 million to $50 million; boating and ocean recreation, with $60 million eliminated; water and irrigation infrastructure, from $94 million to $5 million; Iwilei/Kapalama transit oriented development infrastructure design and construction, from $86 million to $25 million; and Hawaii Green Infrastructure Authority solar energy storage loan program, from $100 million to $50 million. Sometimes it takes a bad situation to make another bad situation better. This might be one of those times.
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Fevella’s Film Feud
On Wednesday, May 31st, there was a press conference held at the State Capitol regarding the Hawaii movie and TV production tax credit. Two of the main speakers were Kevin Holu of Hawaii Teamsters Local 996 and Senator Kurt Fevella (R, District 20). Hawaii News Now shared footage of the event. Mr. Holu complained that there were not enough local Teamster members working on the productions. Earlier in the session, the Teamsters, testifying in favor of House Bill 1373, urged lawmakers to amend existing legislation by: “Adding in safeguards to ensure that productions are engaging with local unions and hiring Hawaii residents and utilizing Hawaii-base businesses for goods and services.” (The Senate Ways & Means Committee, which Senator Fevella happens to sit on, did just that, as we reported on about two months ago.) Senator Fevella launched into a tirade about how the State is now administering the credit. “This is Hawaii,” he said. “People are standing in line to film here but when you have one person making the decisions - that’s the discouragement, that’s the guy’s discouraging people to come here.” (Apparently he filed a personnel complaint against the head of the Hawaii Film Office, Donne Dawson, to emphasize this point.) We wonder if the good Senator has been misinformed. Do you remember Jason Momoa, the Hawaii-born actor who has made it one of his life’s projects to film a Hawaiian historical drama, “Chief of War”? That series is indeed being shot now – in New Zealand. Sure, part of the film was shot in Hawaii – on all of the major Hawaiian islands, according to the Hawaii Tribune-Herald, but, as it turns out, a good part of the movie is shot in New Zealand and a number of the principal cast members are New Zealanders, not Hawaiians. It turns out that New Zealand offers international productions a production grant of up to 25% on qualifying New Zealand production expenditures. Then, economics drove the location decision – “To survive, we had to go to Aotearoa [New Zealand] to survive for this, but by keeping the tax credit, it would give us the opportunity to keep us guys at home,” Brian Keaulana, “Chief of War” producer, was quoted as saying. Perhaps the good Senator thinks that we could have or should have tried to force the production to do all of their shooting here. Back to our good Senator’s speech. Continuing his tirade, he had some choice words for mainland companies managing studios and productions in Hawaii. “You’re darn right I have a problem [with them],” he said. “Everything should be local. It’s our land, it’s our place, it’s our people.” But we aren’t a country unto ourselves. We’re part of the United States, as all Senators should know because they are required by Article XVI, section 4 of the Hawaii Constitution to take an oath to support and defend both the Constitution of Hawaii and the Constitution of the United States. And the U.S. Constitution contains the Commerce Clause, which has been interpreted to mean that no single State has the right to turn away or discriminate against commerce from other States. We’re all supposed to be one big happy family of States in this country. Granting a small tax credit for out-of-state production payroll and a bigger one for in-state payroll, as was proposed this session, is one way of blatantly discriminating against other States, which state governments simply can’t do. There are several other examples of such discrimination in the latest version of House Bill 1373, which died in this past session and, hopefully, will stay dead. We are not sure that the Fevella Feud is now over. We’ll know more in the coming weeks. Until then, we hope that all parties can be better informed. Hawaii’s Shadow Budget
Recently there has been criticism heaped on the Supreme Court of the United Sates for making very important rulings via a “shadow docket” consisting of motions for various kinds of emergency relief. Those rulings are typically made on the papers alone, without the benefit of oral argument, and normally do not contain discussion of the precedents or the reasoning in the “normal” opinions of the Court. Here in Hawaii, we have a shadow budget, not a shadow docket. First, this year’s budget includes $200 million that the Governor can spend at his discretion. The big issue with the $200 million isn’t the basic concept – governors have been given discretionary funds before – but the way that line made its way into the budget bill. Specifically, it wasn’t in the budget bill when the House-Senate conference committee voted to approve it. The conference committee did vote to pass the budget bill “with amendments,” however, and the $200 million was then added to the bill before both houses held final votes on it a few days later, as House Finance Chair Kyle Yamashita acknowledged. That left a bad taste in the mouth of some of the House members, especially, who vented their displeasure on the House floor and voted against the bill. Next, $50 million was included in the budget for a first responders’ training facility near Mililani. It was included in an appropriation for the High Technology Development Corporation. Earlier in the session, however, lawmakers had considered a first responders technology campus. Rep. Amy Perruso, chair of the House Higher Education and Technology Committee, held hearings on the bill and found out that Honolulu Police Department had no intention to use the facility. “We currently have the facilities … this bill proposes to create,” HPD testified. Rep. Perruso’s committee killed the bill. But some senators refused to take no for an answer, and through a “legislative adjustment” process added the appropriation to the budget bill anyway. And there was retribution for a key dissenter. The legislature passed a bill changing the legal requirements for membership on the board, which would have the effect of booting Vassilis Syrmos, one of the members of the HTDC’s board of directors critical of the first responders’ park. (The language kicking out Mr. Symos wasn’t in that bill, HB 999, until the conference draft.) And then, how about our public school teachers? In HB 1004, lawmakers funded $187 million in the upcoming biennium to fund negotiated raises for unionized teachers. But the budget bill taketh away what that bill giveth: the budget bill contains a $167 million reduction of the Department of Education’s budget. Rep. Jeanne Kapela complained that the budget “continues the historic underfunding of our public education system.” And finally, the budget process had many similarities to “ready, fire, aim.” As former Senator Russell Ruderman pointed out in a Civil Beat article, the Legislature’s vote to approve the budget bill was held on May 1. The session ended May 4. The final worksheets for the budget were released on May 15. “The budget bill was not finished by the deadline,” Ruderman says, “and the ’leadership’ insisted that members vote on it anyway, even though many important expenditures were still blank. That is, they voted on a budget bill that they had not read, because it wasn’t written yet!” Supreme Court, you have your shadow docket; we have our shadow budget. Which is more mysterious and arcane? More importantly, what’s wrong with this picture? |
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