Lawmakers pass budget

House and Senate lawmakers gave their final approval to a new, $13.7 billion budget for next year as well as bills to ease jail overcrowding, collect taxes from vacation rental operators, allow an industrial hemp pilot project and permit Alexander & Baldwin to continue using Maui stream water — but not without some spirited debate on the floors of the Senate and House on Tuesday.

Those bills, and dozens of others, will now be sent to Gov. David Ige for decision-making.

The spending plan approved by lawmakers Tuesday authorizes the departments to spend $390 million more than the state will collect in taxes and other revenues next year, but that includes a large deposit of $150 million into the state’s rainy day, or budget reserve, fund.

Lawmakers also agreed to authorize a prepayment of an extra $80 million for future health care benefits for public workers and retirees to more rapidly pay down the unfunded liabilities for public employees’ retirement health care.

The budget debate featured a bitter exchange between Rep. Bob McDermott and some House Democrats over plans to build a new high school on Maui.

McDermott (R, Ewa Beach-Iroquois Point) said Campbell High School in his district is far more overcrowded than schools on Maui, and pointed out that the new budget included only $12 million for a new classroom building at Campbell. Ige had requested $30 million for the project.

McDermott said he is “beyond angry” and “resigned to the fact that we’re going to have a disaster on our hands in two years (because of school overcrowding) and all I can say is, ‘I told you so.’”

The issue will be a test for Ige because enrollment in West Oahu will crest when he is running for re-election in 2018. “I want him to call us back into special session and finish this,” McDermott said. “We need to fully fund this requirement.”

Rep. Mathew LoPresti (D, Ewa Villages-Ocean Pointe-Ewa Beach) said the $12 million for Campbell was the second-largest general obligation bond appropriation for any school in the state, which demonstrates that Campbell students are a priority for lawmakers.

He said the Department of Education reported that the maximum amount of money it could spend in one year is $12 million.

In one of the closest House votes of the day, lawmakers approved a bill to allow the Department of Public Safety to release some inmates who were convicted or accused of misdemeanors to ease overcrowding in the state’s jails. The vote was 33-18, with all seven House Republicans voting against the measure.

Rep. Gene Ward (R-Kalama Valley-Queen’s Gate- Hawaii Kai) agreed that Hawaii jails are overcrowded, but described the bill as “a get-out-of-jail-free card.”

“If you are the public-safety director, you can pick and choose who can walk out the door,” he said. “This is very risky.”

Ward said inmate recidivism causes prisons and jails to be filled to overflowing, and said there would be more room in correctional facilities if the system did a better job of rehabilitating people and providing them with job skills.

House Bill 2391 does not allow for the release of inmates convicted of misdemeanors who are being held in lieu of bail that is greater than $5,000 or who have been charged with or convicted of a violent or serious crime. Also excluded would be people accused or convicted of domestic abuse.

Rep. Joy San Bueanaventura (D, Hawaiian Acres-Pahoa-Kalapana) said it makes sense to give discretion to the director of the correctional system to release people accused or convicted of minor crimes.

“He knows of all people which ones are the most eligible for this,” she said. “We gotta give him some leeway.”

Debate erupted on the Senate floor over two bills that critics say amount to special-interest legislation that benefits private businesses: House Bill 1850, backed by Airbnb, and House Bill 2501, introduced at the request of Alexander & Baldwin.

Vacation rentals

At the beginning of the year, a new state law went into effect requiring owners and managers of Hawaii vacation rentals to post their transient accommodations tax identification numbers on their online advertisements or face stiff fines.

Act 204 is aimed at cracking down on operators of vacation rentals who aren’t paying their taxes and also gives the counties an added tool to rein in the thousands of illegal vacation rentals that have proliferated throughout the islands, aided by online websites such as Airbnb and VRBO.

HB 1850 could in part undermine this law by allowing illegal vacation rental operators to post Airbnb’s tax identification number instead. Under the bill, rental sites like Airbnb could act as a tax collection agent for the state. Airbnb has successfully lobbied for similar legislation in a number of major cities.

Airbnb and senators supporting the measure say the bill would help the state collect millions of dollars in unpaid taxes while leaving enforcement against illegal vacation rentals up to the counties.

But senators opposing the measure Tuesday said the bill would abet rental housing shortages, particularly on Oahu, and exacerbate a growing trend in which people are not only illegally renting out housing units, but also proffering up tents on public beaches and in parks.

“Our quiet residential neighborhoods are turning commercial, our beaches and ag lots are literally being rented to tourists for $39 to $69 a day,” said Sen. Donna Mercado Kim (D, Kalihi Valley-Moanalua-Halawa) as she rose in opposition to the bill. “For what? So that Airbnb can collect $3 to $6 in taxes. Is it worth it?”

Sen. Laura Thielen (D, Hawaii Kai-Waimanalo-Kailua) had successfully put forward an amendment to the bill last month that would require companies such as Airbnb to make sure that their listings are legal. However, the amendment was stripped by a handful of senators last week during a conference committee.

Thielen tried to amend the bill again Tuesday.

“They are coming to us to ask us to pass a law that favors their business model,” said Thielen as she urged her colleagues to support her amendment. “Why on earth would we agree to that and let them turn around and walk out of our state without setting some standards for them?”

Airbnb has said in testimony on the bill that the company’s mission is “to democratize travel by allowing anyone to belong anywhere.” The company says that its website benefits local residents by allowing them to generate supplemental income.

But Thielen questioned the ethics of the San Fran­cisco-based company’s business practices.

“Airbnb’s standard practices: ‘Let us list. We will collect your hotel taxes, and then we will leave a mess for you to clean up,’” she said. “That was fine when it was two guys operating air mattresses out of their apartment in San Francisco many years ago. They are now a multibillion-dollar international corporation. It’s time for them to grow up. It’s time for them to come to the grown-up table and to negotiate with other grown-ups about reasonable business practices.”

Her amendment failed this time around, however, and the Senate voted to approve the bill, 14-11. The bill also passed the House on Tuesday, 30-19.

Maui water

The Senate also passed HB 2501, backed by Alexander & Baldwin, which would allow the real estate and agribusiness company to hold onto the rights to water flowing through dozens of streams in East Maui. The company has said that it needs to maintain access to the water as it closes down its Maui sugar cane plantation and tries to change the fields to diversified agriculture.

In January a circuit judge invalidated the company’s short-term revocable permits for the water, saying that the state Board of Land and Natural Resources erred in allowing the company to continue to access the water for some 15 years under the permits, which are supposed to be used for short-term uses only.

The company’s application for a long-term lease for the water has been bogged down in legal and administrative challenges since 2001. A&B says that HB 2501 will also aid other farmers, utilities and companies that have been operating under the short-term permits for years and might need to apply for long-term leases.

The bill has stoked controversy. Attorneys with the Native Hawaiian Legal Corp., representing Maui taro farmers, and environmentalists have been battling the company for years to have stream flows restored.

“I believe this bill is special-interest legislation for one private entity,” said Sen. Les Ihara (D, Moiliili-Kai­muki-Palolo) in opposing the measure.

“I think it is long past due for the state to allocate water resources based on the public-trust doctrine.”

Sens. Thielen and Gil Ri­viere (D, Heeia-Laie-Waialua) also spoke in opposition to the bill.

Thielen noted that the bill has been amended so that A&B can hold onto the water rights for only up to three years as it awaits a final decision by the Land Board on its long-term lease application.

However, she warned that it “is very common practice within this legislative body to strike those limits a couple years later when people aren’t looking.”

As opponents of the bill stood in the gallery above the chamber floor, fists raised, the Senate passed the bill, 17-8.

The House passed the measure last week.

Psychiatry

In a last-minute move in the House, lawmakers shelved a bill that would have granted limited prescriptive authority to psychologists working with mentally ill patients on neighbor islands.

House Majority Leader Scott Saiki (D, Downtown-Kakaako-McCully) said lawmakers sidelined the bill after realizing there were not enough votes among House Democrats to pass the measure.

He said some lawmakers were worried that the training for the psychologists might not be adequate, and others were uncomfortable with the idea that psychologists — who are not physicians — would be authorized under the bill to prescribe certain drugs to children with mental illnesses.

The bills, along with about 160 more, will now go to the governor.

Ige has already vetoed one bill, SB 2181, which would have allowed terminally ill patients to take experimental drugs.

The U.S. Food and Drug Administration amended its “compassionate use program” in 2009 to expand access to such drugs, wrote Ige in a message to the Legislature explaining his decision.

“While admirably seeking to increase access to potentially life-saving drugs, (SB 2181) unreasonably compromises the consumer protections provided by the FDA’s expanded access program,” wrote Ige.