Key leaders in Hawaii’s diverse sectors grade the work of the 2011 Legislature
POSTED: 1:30 a.m. HST, May 8, 2011
By Alex Santiago
This "D" grade is not a reflection of the effort put in by this legislative body, nor that of the administration. Instead it reflects the outcome of balancing the budget, during this time of economic crisis, by placing a disproportionate burden on those most in need.
Cuts to Medicaid, Temporary Assistance for Needy Families, child abuse prevention services, mental health programs, elderly support programs and other areas that have continuously been made over several years, will surely come back to haunt us in the future.
During a time of rising needs, prevention programs that hold our safety net together are being shut down, and the $150 million cut to Medicaid will likely place people's lives at risk. It is unknown how cuts will be implemented or what the outcomes will be. It is clear, however, that we are dangerously experimenting to see just how far we can cut before we have gone too far, and unfortunately, by the time we realize what has been lost it will be too late.
Revenue generating ideas and severe budget cuts this year were shortsighted. Concerns have been raised as to what we will "raid" next year when the economy has not fully recovered. Instead of asking the question of what was needed in the area of social services, legislators chased a number. Scant attention was placed on what the negative outcomes would be both short and long term. The only goal, it appeared, was to agree on a number and to get the departments to implement the cuts. This is not a good way to set policy.
Still, it could have actually been worse. Some of the proposals to cut social services even deeper were shelved. We are therefore very thankful for the efforts of some legislators to support the needs of our vulnerable people.
Finally, as we start to tally up the cuts made and figure out ways to minimize the damage, we must also start looking to the future. During this interim, efforts must be made to be more proactive. Surely we all support having a social services system in place that helps persons who are less able, children, families, the disabled, the elderly and the homeless. To achieve this will require cooperation from the community and collaboration between the private and the public sector. PHOCUSED stands ready to assist in this effort. We are committed to finding solutions to assure the delivery of quality services to our most vulnerable residents.
By Ann Davis
The House and Senate began the legislative session with great optimism and enthusiasm. We appreciated the collaborative effort to appoint a new Board of Education, and thought the legislators demonstrated tremendous understanding of team spirit during the early days of the session.
>> The legislators exemplified school pride when dealing with Senate Bill 8, despite the fact that they were seriously hampered by budget constraints. Working as a team, Sen. Jill Tokuda and Rep. Roy Takumi displayed commitment to ensure that the appointed Board of Education was appointed and confirmed prior to the end of session. Grade: A
>> We were delighted to see Senate Concurrent Resolution 145 pass, as it recognizes parents and the community as an important piece of the student achievement puzzle. Hawaii Education Matters looks forward to working with the BOE on this policy. Grade: A+
>> We were impressed by the determination of Tokuda and Takumi, who both rose to the occasion and stood their ground regarding instructional hours. Despite serious budget constraints, the legislators honored their commitment to a 180-day school year, ensuring no reduction in days for Hawaii’s students. While we are disappointed in the delay of House Bill 945 and the implementation of Act 167, we are hopeful that schools will be encouraged to increase instructional hours on their own without legislative guidance. We are delighted that many schools are already implementing the law and we hope they act as the model for all schools statewide. Grade: C+
>> Although Tokuda and Takumi demonstrated a strong sense of leadership, legislators still require additional work to fully understand the effects of bullying in public schools. House Bill 688 would have gone far in showing how seriously schools take bullying and we are confident that both the House and Senate will come back next year to pass tough legislation to prevent bullying in schools. Grade: C-
>> We are also disappointed that a number of initiatives relating to farm-to-school programs did not pass. This is particularly disappointing when efforts are growing locally, and nationally, to improve the quality of food in schools, teach children about sustainability, and establish hands-on project-based learning activities in schools. Considering the amount of strong community support for these measures, we remain optimistic that these key areas will be addressed during the 2012 session. Grade: C-
Overall, we felt that the Legislature demonstrated teamwork and leadership in the area of education. We commend parents and community members for collaborating with legislators to keep children at the forefront. They worked hard this session to remind our decision makers that education policy needs to be considered differently, and with a sense of urgency. Students experience adverse effects when deficiencies are not corrected in our public schools. The impact of not passing or delaying a bill could affect a student’s entire middle or high school career.
Overall grade: B-, with lots of room for improvement.
By Lowell Kalapa
It is unfair to give just one grade to the Legislature as there were some moderate successes and some complete failures.
Faced with the most serious budget shortfall in 40 years, the last time being in 1973 when lawmakers were asked to approve an omnibus tax increase proposal, lawmakers approved a two-year spending plan, an accomplishment that should be lauded. Unfortunately, they did so, in part, by increasing taxes with little deference for the impact those increases will have on economic recovery. In that sense, the session was a failure.
However, the Legislature is not entirely to blame. With little direction from the administration other than to raise taxes, lawmakers struggled to find a happy medium. Many of the administration’s proposals were ill-conceived. Proposals to tax pensions, impose a new tax on sugary beverages and up the tax on alcoholic beverages were made without any input from those who would be affected and all went down in well-deserved defeat.
Those that survived, such as eliminating being able to deduct state income and sales taxes, especially for businesses, will have a decided negative impact on the economic outlook. Unlike individuals, businesses are able to deduct “costs” from gross income in order to determine not only the taxable income but also what eventually is considered profit; profit that can either be distributed to investors or stockholders or reinvested in the business, creating more products and services that, in turn, create the jobs needed by Hawaii’s people. In that respect, both the administration and the Legislature failed in creating more jobs.
With the administration’s major revenue enhancement proposals on the cutting room floor, the idea of suspending certain applications of the general excise tax took center stage. Telling those who pay the general excise tax that they should be happy these “exemptions” are being suspended reflects the ignorance of good tax policy and economic impact. The tax will now be imposed on transactions that generally are not seen by the public, yet those increases will affect the cost of living and doing business in Hawaii and more than likely delay the state’s economic recovery.
The more important issue is the need to nurture the economy, which should be at the top of the agenda for the next Legislature. If there is any shortcoming lawmakers need to address, it is their lack of knowledge about how the economy works.
By Laurie Temple
Creating a secure and prosperous Hawaii includes sensible budgeting, increasing economic opportunities, and protecting our civil rights. Success in these areas can empower us and our communities to reach our full potential and to ensure the integrity and viability of government in a free society. While legislators did some good, there were an abundance of disappointments. The ACLU of Hawaii grades the 2011 session as follows:
A for equality — the right to equal treatment. We commend the Legislature for taking substantial steps toward protecting LGBT (lesbian, gay, bisexual and transgender) individuals’ rights by passing the civil unions bill and banning employment discrimination on the basis of gender identity. Providing LGBT individuals with the security, stability and dignity they need will help foster strong families and communities.
B for justice — the right to be treated fairly by the government. Our right to justice was protected by eliminating mandatory minimum sentences for a number of nonviolent crimes, allowing the three-strikes law to expire, and ensuring that inmates have access to reintegration programs. The Legislature can and should do more, however, to provide alternatives to incarceration and improved rehabilitation services.
B- for democracy — the right to have an equal say in the government. Our right to free speech was enhanced by extending the media shield law and the right to vote was strengthened by making absentee ballot and online registration improvements. However, government transparency and accountability suffered when it came to the state’s questionable dealings with for-profit prisons. We encourage the Legislature to ensure that our government is “by the people, for the people.”
D for liberty — the right to be free from unreasonable government interference. The one bright spot was the long-overdue passage of a bill banning the shackling of pregnant inmates. Unfortunately, other bills protecting our freedoms failed, including:
>> A bill to require hospitals to provide emergency contraception to sex assault survivors, which is necessary to ensure that women, particularly those with no access to 24-hour pharmacies, have access to time-sensitive contraception;
>> Multiple bills to improve Hawaii’s medical cannabis program. Despite complaints about medical autonomy and the continuing detrimental impact on patients who lack safe, legal access to medicine, the Legislature failed to make any improvements to Hawaii’s 11-year-old medical cannabis law.
By Dylan Nonaka
This year’s legislative session failed the people of Hawaii. The governor and the majority party in the Legislature failed not only to address but to recognize that job creation, economic recovery and reducing the cost of living should have been their priorities.
Strengthening our economy and creating jobs should clearly be a priority for government when we are in an economic recession. When looking back at this legislative session, sadly, not one piece of successful legislation would accomplish either of these goals. It is disturbing and disheartening to realize that our state government is so out of touch that it did not even pretend to try and create jobs or improve our economy.
The way our Legislature approached cost of living issues was even more disappointing. It’s clear that working families do not have more money to give to government, no matter how noble the program or service. Instead of recognizing this, policy makers chose to sharply increase our cost of living both through direct and indirect tax increases.
The removal of general excise tax exemptions on many businesses will increase the costs for families to fly to the neighbor islands, fill up their gas tanks, ship goods, and build or renovate their homes. Adding insult to injury, we will also have to pay an average of $55 more in vehicle registration taxes.
In all, the Legislature is increasing the tax burden on Hawaii families by $600 million. This translates to about $600 per person, $1,200 per married couple or $2,400 per family of four. When most families and businesses are cutting costs and reducing their spending, our state government increased its spending by $800 million. This 7 percent increase in spending sends a clear message that our government believes that it does not need to function like a household or business.
It is my hope that next year, the leaders of our state government can look past protecting the special interests that feed off our bloated state bureaucracy and focus on creating jobs, growing the economy and making it easier to survive in Hawaii. Families trying to make ends meet cannot afford another session that fails them like this one did.
By Melissa Pavlicek
Legislators, like small business owners across the state, were faced with extremely tough budget choices this year. We opposed an increase to the state general excise tax and recognize how difficult it was to close the $1.3 billion state budget gap without it. We hope that courage holds if there is a special legislative session even as tax revenue forecasts are expected to remain a challenge for the remainder of this year.
Some think that Hawaii’s excise tax rate is already deceptively “low” at 4.5 percent on Oahu, but experts estimate that in reality Hawaii’s rate is the equivalent of a 12 percent sales tax. The impact of excise tax increases reverberates through the economy in ways that are both seen and hidden, increasing the costs of goods and services and hindering Hawaii companies’ competitiveness. Small businesses feel the brunt of any increase first as customers can’t absorb the costs and the cost of providing our goods and services is raised across the board.
The National Federation of Independent Business represents more than 1,000 companies in Hawaii, most with fewer than 10 employees and less than $1 million in revenue. Our businesses have cut fat and tightened our belts for more than two years. There is little room for state tax revenue “enhancements” without shutting businesses’ doors. Small businesses in Hawaii collectively represent many thousands of jobs, as well as the promise of new ideas, innovative products and services that can and do put Hawaii on the economic map.
We were encouraged by efforts of the bipartisan Small Business Caucus led by Sen. Carol Fukunaga and Rep. Angus McKelvey and support their efforts to find ways to help small businesses that don’t impact the state budget. One example was the passage of House Bill 519, which would allow the owners or co-owners of limited liability companies to exclude themselves — like the owners of a corporation already can — from purchasing workers’ compensation coverage.
We’ll be back at the Capitol next year, and at any special session, advocating for other ways to trim the cost of running a business in Hawaii, ways that would earn the legislature our “A+”.
By Robert D. Harris
In setting the budget, our Legislature must weigh numerous competing demands of state government: schools, prisons, highways, airports, economic development initiatives, and so on. This can be an unenviably difficult task in a weak economy.
Yet, budgetary challenges do not excuse policymakers from advancing a vision of our preferred future. Instead, budgetary challenges demand greater innovation and leadership to do more with less — to protect initiatives that move us toward future economic prosperity and to carefully avoid curtailing those essential services that would result in long-term harm to our environment and economy.
In this light, some of the choices made by the Legislature were woefully shortsighted.
Consider decisions regarding energy and food security, two areas that have the potential to drive our economic future. Much of the positive impact of our $12 billion tourism industry leaves our state when we spend $8 billion to import oil into Hawaii each year. When the price of oil rises from $80 to $100 per barrel as it has in the past several months, we essentially are taking another billion dollars out of our economy. Each $10 increase in the price of a barrel of oil means an additional $1.4 million leaves the state economy every day.
Because of the urgency to wean ourselves away from the uncertain and fluctuating cost of oil, a broad group of business and environmental leaders enthusiastically supported a bill that redirected a portion of last year’s “barrel tax” revenue to fund our state’s clean energy programs. Last year, the Legislature placed a $1 fee on each barrel of oil in order to fund food and energy security programs. Although intended to tap the source of our problem to fund a preferred future, only 40 percent of the tax increase was directed toward food and energy programs.
Instead of making even a token effort to discuss the need for additional funding this year, our state House leadership elected not to appoint conferees to this bill. As a result, our state energy office will need to look at reducing programs that have a track record of moving us toward greater energy self-sufficiency.
Likewise, we watched the Legislature squabble over a proposed tax on pensions while the House leadership held up a common-sense, popular bill that would have created more revenue by placing a 10-cent fee on most paper and plastic bags. Senate Bill 1363 won near-universal acclaim from both the environmental and retail communities, including Safeway and Times supermarkets. This innovative measure would have reduced Hawaii’s opala and marine debris, while providing the funding necessary to invest in our environment and clean energy future. One of the beauties of the concept was that it was an entirely avoidable fee — by using reusable bags, consumers could have avoided any increased cost. It’s a classic win-win solution, defeated because of shortsightedness.
The 2011 Legislature missed an opportunity to advance measures that would have furthered the state’s long-term economic and environmental future. The people of Hawaii deserve better.
By Barry Fukunaga
The recent Legislature ended with disappointing but predictable results. Rather than undertake a concerted effort to address the fiscal challenge facing the state and seriously pursue meaningful adjustments to curtail spending and foster job creation, lawmakers and the administration chose to develop a budget that will spend more, place additional financial burdens on businesses and cause further loss of jobs.
Thankfully, efforts by the state Senate and various special interest groups to raise the state’s general excise tax failed. Sadly, that appears to be the most noteworthy outcome of this past session. Unfortunately, excise tax exemptions, including those for sub-contractors and Hawaiian Airlines, that would have helped businesses maintain their workforce during this difficult time were eliminated. If there is no serious effort to cut the size and cost of government, the general excise tax will continue to be seen as a target of opportunity in the years ahead and that will place additional financial burdens on Hawaii’s families and businesses.
Nothing currently points to any significant recovery in the economic stagnation facing the world, and in the face of rising oil prices, faltering tourism and fewer federal dollars, the revenue picture facing our state government will get tougher before it gets better.
Despite statements to the contrary, city officials have yet to demonstrate any clear indication that they will significantly restrain spending. In fact, the mayor has proposed and the City Council is considering an increase in the gas tax. As we continue to experience increases in shipping costs, basic utility services and individual transportation costs, we have yet to bear the added major expenses that will be associated with upgrading our city’s potable and waste water systems, establishing a new landfill and closing the existing facility and the cost of debt and operating expenses for the planned rail system.
While these are city-related issues, the reality is that all of these activities and their associated costs fall on the same funding source, the individual taxpayer and the businesses that constitute the economy of our state.
All levels of government need to seriously curtail spending, focus on job creation through regulatory and rules reforms as well as incentives for businesses that will promote investment and reduce the cost and time it takes to get things done.
Economic recovery will only occur when new, high-quality jobs are created and in order to do so, it is necessary to reduce the barriers and costs to businesses to foster job creation, not add more cost upon the citizens of this state.