Download "Road map to prosperity "

The institute urges best practices for a successful recovery

HONOLULU, May 22, 2020 >> The Grassroot Institute of Hawaii today published a new policy brief, "Road map to prosperity," that offers almost two dozen proposals regarding how Hawaii can recover and even excel after the state's economically devastating coronavirus lockdown.

As the document states, Gov. David Ige and the state’s four county mayors were able to shut down Hawaii’s economy quickly in early March, "but restarting it is a different matter. It is not as simple as flipping on a switch. Even with the best of intentions, our state and county governments do not have the resources or ability to bail out every business or family in the state. Nor is it possible to manage away all health and safety risks."
Urging Hawaii policymakers to "focus on the fundamentals," the brief lists almost two dozen policy options that could help get people back to work in Hawaii, covering economic opportunity, healthcare, transportation and the state budget.

It challenges the many calls for greater government spending, borrowing and taxing, reminding that all such practices ultimately fall on taxpayers, whether now or in the future.

Acknowledging the calls for greater economic diversification, the policy brief states: "The reality is that tourism will always be an essential part of Hawaii’s economy. Thus, the regrowth of the industry must occur with the input of both the large and small businesses that rely on tourist dollars.

"Along the way, the governor, Legislature, mayors and county councils should roll back the many laws and regulations that stifle the industry, from high taxes and excessive regulations aimed at the industry generally to the draconian rules and fines aimed specifically at short-term vacation rentals.

"The biggest hurdles for the tourism industry right now are the 14-day quarantine and widespread fear of tourists being possible carriers of the coronavirus. But at some point, Hawaii residents will need to accept the risks of welcoming visitors back to the islands, and whenever that happens, lawmakers should get out of the way and allow the vacation industry to pursue its own strategies to attract customers."
Other policy recommendations include:

>> Cut nonemergency state spending and department budgets by at least 10%.

>> Defer discretionary public construction projects.
>> Lower barriers to the use of private contractors for the delivery of public services and nonunion contractors on public works projects.
>> Reform the state’s public pension system.
>> Create a state spending cap protected by a vote of the people.

>> Reject any new taxes or fees, including tax or fee increases, for at least two years, at both the state and county levels.
>> Permanently exempt food and medicine from the state general excise tax.

>> Exempt healthcare providers and services from the state general excise tax.

>> Make permanent the emergency measures that expanded telehealth and allowed out-of-state doctors to practice in Hawaii. Consider expanding them to include other medical professionals.
>> Encourage more housing development by expanding urban boundaries, reforming zoning laws on existing urban land and streamlining the permitting process.

>> Enact tort reform to protect businesses during the reopening period.

>> Create a semi-independent airport corporation to manage the state’s airports system.
>> Urge Congress to reform the Jones Act by modifying the U.S.-build requirement.
>> Pause construction of the Honolulu rail for a thorough cost-benefit evaluation.

In the short run, these and other policy recommendations presented by the institute would help revitalize Hawaii's economy quickly, while in the long run they would help it excel.

As the policy brief states:

"The coronavirus pandemic and accompanying shutdowns have created a difficult challenge for Hawaii policymakers. But there is a clear road map, based on historical precedent and best practices, that can put Hawaii back on the road to a strong, healthy and vibrant recovery. All that is needed is for policymakers to embrace the principles of economic freedom."

To learn more about the report, or arrange an interview with Keli'i Akina, institute president, contact Mark Coleman at 808-386-907 or info@grassrootinstitute.org.
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The Grassroot Institute of Hawaii is an independent 501(c)(3) nonprofit policy research organization that seeks, in the spirit of “E hana kakou!” (Let’s work together!), to educate people about the values of individual liberty, economic freedom and accountable government.

Money Laying Around?
By Tom Yamachika, President

During this period of emergency and with our State facing revenue shortfalls of Brobdingnagian proportions, the State Auditor has been busy at work trying to find options for legislators to consider for getting the state budget back on track.

In Report No. 20-07, the auditor focuses on three special funds.

One of them is related to a program known to almost everyone:  the deposit beverage container program, or HI-5 as it is sometimes called.  Previous auditor’s reports, some of which we commented on in this space, complained of irregularities. Even after all of that, however, the program’s special fund has been steadily swelling over the years, to the tune of around $5 million each year.  It now holds nearly $49 million.  What is that money now doing?

The report also mentioned DLNR’s Special Land Development Fund, which is fed by, among other things, ceded land revenues.  In the three years covered in the auditor’s report, the fund collected $47 million in revenues, paid 20% of them to OHA as the statute requires, and then kept more than half of the rest.  The auditor and DLNR then got into a big dispute (see Report No. 19-12) about whether DLNR was allowed to spend that money for its own purposes, thereby bypassing the appropriation process.  The fund now has $36 million in it.

The third fund was also from DLNR, this time its Land Conservation Fund.  This fund is primarily fed by a Conveyance Tax earmark that is limited to $6.8 million per year.  However, its expenses are capped at $5.1 million per year.  The fund now has $33 million in it, of which $16.6 million had not been set aside for projects or program expenses – sitting idle, in other words.  And by the way, many of the projects backed by that fund took multiple years to complete.  Four projects now in the pipeline had been pending for 5 years or more.

In Report No. 20-06, the Auditor performed simple mechanical tests on all the funds in the State’s accounting system.

First, it found that 64 accounts had no deposits or withdrawals in five years.  Most of them are small, but four collectively hold $73 million.  No attempt was made to ask the agencies holding those funds why they still exist; the Auditor left that part up to any legislators who may be interested.

Second, it focused on accounts with average balances for the past three fiscal years were more than double the amount of the outflows (expenditures and transfers out).  The idea was to figure out which funds had cushions in them.  Again, no attempt was made to ask the agencies holding those funds why the cushion was there.  Out of 1,877 special and revolving fund accounts reviewed, 257, collectively with $2.28 billion, met the criteria. 

Some examples are the Dept. of Budget and Finance’s rainy day fund, with $325.9 million and average cash out of zero; DBEDT’s dwelling unit revolving fund, with $154.9 million and average cash out of $17.2 million; DBEDT’s rental housing revolving fund, with $362.7 million and average cash out of $61.7 million; a Department of Transportation account related with the Kapalama Military Reservation improvements, with $109..9 million and average cash out of zero; and its Passenger Facility Charge special fund, with $211.7 million and average cash out of $17.1 million.  These are the five biggest ones, but there is plenty more where they came from.

Can some or all those millions be redirected to other areas of need?  If they cannot, should those funds be paying for things that other, less restricted funds (such as general fund moneys) are now paying for?  These questions need to be asked and answered before we consider more painful revenue raisers like tax hikes.

Government in the Darkness
By Tom Yamachika, President

Previously in this space, we spoke of various laws that were suspended by the Governor’s emergency proclamations.  In a press release on March 17, 2020, entitled “Democracy Still Matters in Time of Pandemic,” the watchdog group Common Cause Hawaii pointed out that a Supplemental Emergency Proclamation, issued by Governor Ige on March 16, 2020, suspended many laws pertaining to transparency and accountability, including chapters 92 and 92F of the Hawaii Revised Statutes, relating to open meetings of government decision-making bodies and public access to government records.

The Office of Information Practices, which enforces both of those laws, issued advice to agencies and boards on March 23, and, among other things, told agencies that boards and other public bodies holding meetings were encouraged to give notice and public visibility to meetings but it was okay to meet behind closed doors with no public notice.  Public records requests made after the Supplemental Emergency Proclamation took effect could just be ignored.  It told agencies that if they wanted to respond, they could say: 

As this is a global pandemic and a serious threat to the safety and welfare of our state’s population, 92F was suspended to give government the maximum flexibility to focus its attention and personnel resources on directly addressing the immediate situation at hand.  When the situation is stabilized and there is proper leeway to re-direct those resources, the suspension of 92F will be lifted.
 
Basically, the Administration’s attitude was something like treating concerned citizens like pond scum, and saying, “We’ll get back to you later.  Maybe.”

In the Seventh Supplemental Proclamation on May 6, the Administration backed off a bit.  With regard to public meetings, boards were now ordered to post meeting notices and accept written testimony from the public.  Regarding records requests, agencies now needed to acknowledge them, respond to them as resources permit, and aren’t supposed to destroy either the requests or the requested records.

That modest progress happened because of the Civil Beat Law Center negotiating over several weeks with the Department of Attorney General on behalf of a coalition of nonprofit public watchdog groups including the Tax Foundation of Hawaii.

To me, however, justification for suspending these laws in the first place is and was sketchy. 

Under the emergency powers statutes, the Governor can suspend any law that creates hardships and inequities; obstructs public health, safety, or welfare; or impedes or tends to impede emergency functions.  Could someone explain to me how allowing public board meetings to be conducted in public creates hardships and inequities?  Could someone explain to me how the public records laws impede emergency functions?  Could someone please explain to me how or why the snuffing out of governmental accountability relieves hardships and inequities, or obstructs public health, safety or welfare? 

The official explanation, that compliance with the laws will take away agency time and resources and otherwise would be inconvenient, could be applied to any law in any way restricting the power of government.  At least the federal laws and state constitution can’t be suspended in this way.

The Common Cause Hawaii press release said it well:

Any reduction in public participation in government proceedings must not be exploited by any political party or interest group for personal, partisan, or other political gain. The same rules of access must apply to everyday Americans and well-connected lobbyists. This is a time for our country to be united to protect each other as we face COVID-19, and that includes respecting and protecting public participation in and oversight of government.