Bride of Frankenbill!
 
We wrote last week about House Bill 58, a “Frankenbill” made from bits and pieces of other bills.  By putting those pieces into a bill that is still alive at the Legislature, those pieces are given new life.

It turns out that our lawmakers are not stopping at just one Frankenbill.  Let’s look at House Bill 468.
This bill is called “Relating to the Hawaii Employer-Union Health Benefits Trust Fund.”  In its present form (House Draft 1), it would take away Medicare Part B reimbursement for employee spouses for employees hired on or after July 1, 2021.  At least one of the public worker unions testified against it.  So, although it passed the House, the bill languished in the Senate.

At the same time, an Administration bill from the Department of Budget and Finance, Senate Bill 1087 / House Bill 933, would have suspended existing laws calling for annual required contributions to the Employer-Union Trust Fund for fiscal years 2024 and 2025.  House Bill 933 received no hearing in the House and died relatively early in the session.  The Senate bill sailed through the Senate and crossed over to the House, where it received no hearing and died.

Now, the Senate has published a proposed Senate Draft 1 of House Bill 468 that looks a whole lot like Senate Bill 1087 without any of the material that House Bill 468 used to have.  By the time this article goes to press, the Senate Committees on Labor, Culture and the Arts and Ways and Means would have heard the bill and made the switcheroo.

Some of you may have heard the term “gut and replace.”  That term is used to describe how a bill’s contents are entirely replaced with material bearing little if any resemblance to what the bill used to say.  It is one form of Frankenbill, and that is indeed what we have here.

Why is this bill so critical?  Imagine what would happen if you had a mortgage and then stopped making payments on it for a couple of years.  When you finally got around to making payments again, the debt would still be there and the interest would have racked up.  Paying off the mortgage would probably take quite a bit longer than the two years that were deferred.  If, for example, you had a $500,000 mortgage at a 30-year fixed rate of 4%, you would be making principal and interest payments of $2,387.  If you stopped making payments after year 5 and took a break for 2 years, your balance due would grow from $451,000 to $487,000, after which you would need 340 more monthly payments at the same amount, or 28-1/3 years, to pay off the loan. That would mean you would have to make 3 years and 3 months of extra monthly payments.

What is EUTF?  The State of Hawaii has promised to provide health benefits to its long-time employees for the rest of their lives.  EUTF is a fund set up to fulfill that promise.  According to the most recent actuarial report from EUTF’s website, the present value of the benefits the State has promised to its eligible retirees exceeds the expected value of the plan’s assets by $11.5 billion.  The $11.5 billion is like a debt that the State and its taxpayers must pay. 
The Medicare Part B benefits, which House Bill 468 addressed before being turned into Bride of Frankenbill, accounted for $3.23 billion out of the $15.4 billion in actuarial accrued liability.

Lawmakers, we ask again – what can we afford to do, or not do?

Happy Spring!
 
Join us on ZOOM 9:00AM - 11:00AM Thursday April 15, 2021 to learn more about Respirators, Masks and Fit Testing for your office, business, restaurant, classroom and outdoor surroundings from our Lahaina-Based Safety Expert Dr. Dennis Terpin.
 
Students, Government Officials, Healthcare Providers, Private and Public Schools, the Hospitality Industry and Construction & Trades should understand designating a Respiratory Program Administrator to maintain SOP's for the safety of employees, customers and guests.
 
Please share with others who may have an interest as our community, state, nation and world eventually opens to wider commerce and travel.
 
Respiratory Protection Administrator Seminar
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or contact the Lahaina Education Center for information.

 
Contact the Lahaina Education Center
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The University of Hawaii Maui College

Return of the Frankenbill!

Most of us have heard of “Frankenstein,” a novel written in 1818 by Mary Wollstonecraft Shelley.  The story’s protagonist, Dr. Victor Frankenstein, created a creature by assembling bits and pieces from cadavers and then bringing it to life using some unexplained method. (Mad scientists have to have their trade secrets!)

A “Frankenbill” or “Frankenstein bill” is one that is made by cobbling together bits and pieces of other bills, especially bills that have already died in our legislative process.  By engrafting those bits and pieces into a bill that is still alive in the process, those pieces are effectively given new life.

In our Legislature, the Senate passed an omnibus tax increase bill, Senate Bill 56, which we in this column have called the “Enola Gay” bill.  It contained massive increases in income tax, both individual and corporate; wholesale 2-year suspensions of exemptions in the general excise tax; and a hefty increase in the conveyance tax.

After a public uproar over the Enola Gay bill, leaders in the House of Representatives moved swiftly to stomp on the bill.  The House Speaker’s office gave the bill a quadruple referral, meaning it had to clear four different House committees in a relatively short time if it were to survive.  That made the bill as good as dead, according to House Majority Leader Belatti.  As of the Second Lateral deadline of March 25, none of the four House committees to which the bill was assigned had bothered to hear it.  That bill is now officially dead.

But, in a hearing notice released on March 25, the Senate Ways and Means Committee declared its intention to stuff some of the major pieces of Senate Bill 56 into House Bill 58, a bill that at the time of crossing over to the Senate only provided for the temporary reallocation of conveyance tax revenues to pay debt service that the State owes on its general obligation bonds.  The Proposed Senate Draft 1 of this bill contains new parts temporarily repealing the general excise tax exemptions and juicing up the conveyance tax for properties over $4 million. 

Another proposed new part would reduce the Hawaii estate tax threshold.  The estate tax threshold is the size of a decedent’s estate below which no estate tax is owed.  Once the threshold is passed, the estate tax ramps up very quickly.  In 2020, the Hawaii estate tax threshold is $5.49 million while the federal estate tax threshold is $11.58 million.  The bill would reduce the Hawaii threshold to $3.5 million.

According to the website of the good government organization Common Cause Hawaii:
[O]ur Legislature is not supposed to pass a bill which addresses 2 or more unrelated subjects, and is not supposed to pass a bill whose subject has not had 3 separate readings in the State House and 3 separate readings in the State Senate. The purpose is to ensure a fair process, where the public and legislators have time to review and comment on proposed legislation.

Unfortunately, legislators use deceptive practices such as “gut and replace”, when a bill is stripped of its original content and replaced with an unrelated bill’s contents, and “Frankenstein bills” which is when bills encompassing various subjects are cobbled together into one bill.

This new Frankenbill is scheduled to receive a hearing in the Ways and Means Committee on March 31st.  The hearing would have been held just before the publication date of this column.  What did our lawmakers do?  Did they create the Frankenbill, perhaps to be used as a bargaining chip in the waning days of this legislative session?  Did they stuff this bill or other bills with the stratospheric income tax increases that have brought us national and international attention, and not the good kind? 

Be informed!