Businesses get a break on state fees after funds go unspent

State officials have reduced or halted collection of a number of business and licensing fees amid concerns that the money being collected wasn’t serving a useful purpose.

The fees were attached to four special funds that were set up to regulate financial institutions, the cable industry and condominiums. The revenue generated from the fees was supposed to go back into regulating the respective industries. However, a review of the funds found ballooning balances and limited spending, said Rep. Takashi Ohno (D, Nuuanu-Liliha-Alewa Heights), chair of the House Committee on Intrastate Commerce, who worked with the Department of Commerce and Consumer Affairs to reduce the fees.

In one case, a special fund set up in 2010 to regulate mortgage companies had accrued a balance of $1.8 million as of the 2018 fiscal year. But none of the money was ever spent, said Ohno. The fund was supposed to help consumers hurt by fraudulent or deceitful lending practices recover damages. The state has halted the collection of fees for this fund. Mortgage companies were being charged $200 for each principal office location, $100 for each branch office location and $100 for each loan officer, according to DCCA.

State officials also won’t be collecting a $5 biennium fee from condominium unit owners. Revenue from the fee is deposited into the Condominium Education Trust Fund to support education and research into condominium management and condominium-related disputes. The balance of that fund had grown to $2.5 million as of the 2018 fiscal year, up from $785,062 in fiscal year 2015. On average, the state had been spending about half a million from the fund during those years, allowing the balance to increase at a high rate.

The state also has reduced annual assessment fees charged to financial institutions and reduced franchise fees charged to cable television operators. DCCA did not provide a breakdown of those fees.

Ohno said that his aim in pushing for a reduction in the fees is to create a more business-friendly environment.

“The price to do business in Hawaii concerns me, and I’ll continue to judiciously monitor our state’s budget to ensure we aren’t over-collecting fees from the business community,” said Ohno in a statement. “I fear that many of the high fees are ultimately passed on to the public.”

Ohno said there are other special funds he’s concerned about, including funds that collect fees from contractors and real estate license fees.

DCCA officials said in most cases the department or the administratively attached board that oversees the funds received approval from Gov. David Ige to offer the “fee holiday.”

DCCA said the fee reductions are not expected to impact regulatory oversight.

“DCCA will continue to monitor the revenues, which fluctuate regularly due to a number of factors not within DCCA’s control, to ensure that consumers will not be negatively impacted,” said Jessica Chil­lingworth, an education specialist with DCCA by email.

COST SAVING

State fees reduced or halted on:

>> Mortgage companies

>> Condominium unit owners

>> Financial institutions

>> Cable television operators