Column: Unlicensed handyman bill needs retool

This is about Senate Bill 767, now sitting on the governor’s desk, regarding increasing the unlicensed handyman limit from $1,000 to $1,500. This hasty legislation would raise, by 50%, an unlicensed contractor’s limit — but consumers, plus state revenues and the duty to protect consumers, get nothing.

Current law requires a licensed contractor for construction that costs more than $1,000 or that requires a building permit — but an unlicensed handyman is allowed if the project, including labor and materials, is $1,000 or less.

Frankly, both legislative chambers and the Department of Commerce and Consumer Affairs (DCCA) neglected to truly consider the public interest; this was mostly supported by the Realtors lobby. Neither consumers nor the state Tax Department were well represented, and DCCA took a hands-off neutral position in testimony.

If allowed to become law this legislation would, negatively:

>> Increase the current high degree of risk and financial harm, especially for unsuspecting kupuna. Unlicensed types are probably 95% uninsured, leaving scammed consumers with the potential of losing everything to settle a personal injury lawsuit, and/or to potentially suffer a flood or have a fire, causing serious contingent liability, especially in a high-rise condo with often many floors flooded.

>> Increase the amount of unpaid taxes by probably up to 50% over the existing black-market cash economy, which is costing the state millions in unreported general excise tax annually from this industry.

But on a positive sidenote: One potential improvement, though ultimately shelved in legislative committee, would have required all unlicensed contractors to register with the state and show the public a current GET license, plus their state driver’s license. Many hundreds of unlicensed types advertise on Craigslist, claiming they are licensed in some cases, but when questioned and answering yes, say they have a driver’s license.

Let me offer two more reasons to send this bill back to the Legislature to make it consumer- and tax-protective:

>> The unlicensed contracting state felony penalties start at $2,500 per violation, and require consumers — who might be embarrassed or frightened — to turn in a scofflaw twice to the Regulated Industries Complaint Office (RICO). There should be a civil fine and warning for violators not showing the public their GET licenses and their driver’s licenses; and they also should be subject to a civil fine for complaints and/or cash runaway for all infractions. It’s meaningless, as SB 767 does, to ask DCCA to report back next session on the number of incidents, since these don’t truly reflect the problem.

>> Undertake a public service campaign — sponsored by the media, the building industry trade associations, the elder abuse centers, RICO and DCCA — to encourage consumers, and kupuna especially, to ask to see unlicensed handyman GET and driver’s licenses. The Honolulu Police Department is fully hamstrung chasing scofflaws, cheats and cons because they are untraceable.

Finally, California reduced its unlicensed handyman exemption to $500 and has geared up to conduct stings. RICO deserves more staff to help police and to administer this new program, and it could be paid for through previously unreported tax revenues now being forced onto a level playing field, alongside the 8,000 or more licensed contractors in Hawaii who play and pay by the rules.

I truly believe after decades of sizing up this growing issue, these fixes would make staff increases revenue- neutral or better — and the public greater good would be protected.