In a sharp break with political tradition, Gov. David Ige joined leaders from the state House and Senate at a news conference Tuesday to announce a complex package of tax relief, affordable-housing plans and a preschool development program, all designed to provide cost-of-living relief to Hawaii’s low-income and working-class residents.
The package of four bills developed by lawmakers will be introduced after the start of the 2020 legislative session, which kicks off at the state Capitol this morning.
Ige is supporting the bill package, which will include a proposal to increase the state minimum wage in a series of steps to $13 an hour by 2024, and also features about $75 million per year in tax relief for less affluent households, according to House and Senate leaders.
The tax plan would create a new refundable state earned income tax credit that lawmakers expect will provide some help to about 90,000 Hawaii taxpayers, and also would expand the state food tax credit. Creating the refundable income tax credit is a step that social services advocates have urged lawmakers to take for years.
The tax credit for food purchases, which is designed to offset the impact of the state excise tax on food, would be increased to $150 per person for each household earning less than $50,000 per year. Currently, the credit ranges from $110 per person for the poorest households to $35 per person for families making $40,000 to $50,000 per year.
Child care and housing
While the components of the tax package and minimum wage proposals were outlined pretty clearly Tuesday, the affordable-housing and preschool proposals were more complicated, and not all of the details have been spelled out.
There are an estimated 20,000 3- and 4-year-old children who never attend preschool today, and the package that lawmakers and Ige unveiled seeks to develop enough low-cost or free preschool slots to place all of those children in preschool classrooms.
Lawmakers dubbed that the “Learning to Grow” initiative, which would use a public-private model to provide affordable child care. The plan is to use public funds to increase the capacity of existing private preschools and develop entirely new facilities where they are needed.
To accomplish that, lawmakers say they intend to set aside space in state facilities including Aloha Stadium, the Hawai‘i Convention Center and each of the university campuses so that parents can drop off their children near their workplaces.
The lawmakers’ package also proposes a new push to develop 17,000 affordable leasehold multiunit dwellings on state land in the next five years that would be marketed to working-class families earning up to 140% of the area median income.
The first site for that initiative would be on land held by the University of Hawaii at West Oahu near the West Oahu rail line. To subsidize the cost of development, the state would commit $200 million to install infrastructure such as waterlines and roads on state land in the area. Another $75 million in state funding would be used to install infrastructure on state land on the neighbor islands to prepare it for development.
In another proposal that may be controversial, lawmakers are also proposing to authorize the counties to amend the state land use district boundaries on properties of 25 acres or less, which would allow developers to bypass the state Land Use Commission on those projects. Currently, the counties can amend the state boundaries only for projects on 15 acres or less.
Relief for families
The package of housing proposals also would make the counties responsible for reviewing the cultural and historic preservation issues for some developments, rather than referring each project to the State Historic Preservation Division for review. SHPD, a division of the state Department of Land and natural Resources, has been understaffed for years and is often blamed for delays in developments.
Ige said in a written statement that the package of bills provides a blueprint for changes that will “better the lives of Hawaii’s people and make the islands a place that future generations will be able afford to call home.”
“Many of our families are living paycheck to paycheck, and this proposed package of bills is designed to ease the burden on those struggling to stay afloat and provide a more stable future for the next generation,” Ige said in the statement.
House Speaker Scott Saiki said that the bills respond to issues highlighted in a report sponsored by the Aloha United Way called “ALICE: A Study of Financial Hardship in Hawaii.” ALICE stands for “Asset Limited, Income Constrained, Employed,” and the report described economic hardships facing Hawaii working people and families.
The report found that given the cost of housing, child care, food, taxes, health care and transportation in Hawaii, a family of four needs to earn about $77,000 a year to survive. It concluded that 47% of households here are barely able to provide basic essentials.
“It could take just one incident for these households to fall into a crisis. We have to do better for our families,” Norm Baker, chief operating officer at Aloha United Way, said in a statement. “We are grateful that our lawmakers are working on a legislative package and partnering with nonprofits and the private sector to create solutions that will help lift our ALICE households.”
Given the complexity of the package, some social service advocates said they were still unclear on the details but pleased that lawmakers seem determined to address cost-of-living issues in Hawaii.
The refundable state income tax credit “is huge for low-income working families,” said Gavin Thornton, executive director of the nonprofit Hawai‘i Appleseed Center for Law and Economic Justice. “We’re absolutely thrilled with that piece of this.”
“The thing that I’m most excited about is the coming together,” Thornton said. “This type of thing hasn’t happened before where you’ve had the Legislature, the administration, business leaders, nonprofits getting together in the same room to try to figure out these problems, and the focus is on Hawaii’s struggling families.”
However, the Hawai‘i Children’s Action Network, the organization Faith Action for Community Equity (FACE) and Appleseed issued a joint statement saying they “have no comment on any specific legislation until more details are released.”
Josh Frost, co-chairman of the Legislative Committee for the state Democratic Party, said Tuesday the party wasn’t included in the discussions that led to the bill package, and he wasn’t entirely sold on the plan.
The minimum wage proposal would increase Hawaii’s minimum wage of $10.10 per hour to $11 next year and to $12 in 2022. It would continue to increase in steps to $12.50 in 2023 and to $13 in 2024. That is well short of the $15-per-hour minimum or $17-per-hour minimum that were proposed by some advocacy groups.
“Obviously, we’re disappointed with the proposal, but session starts tomorrow and we hope to work with them to find a compromise that we can all agree on,” Frost said.
Looking at the tax proposals and the minimum wage increase combined, “in the totality, is that enough to move people out of poverty? To me that’s the question. I don’t know the answer but I suspect it’s not, and I think that’s something that we need to look at,” he said.
2020 LEGISLATIVE SESSION OPENING DAY
>> Starting time: 10 a.m.
>> Where: State Capitol
>> Television: Senate: ‘Olelo channels 49 and 1049; House: ‘Olelo channels 53 and 1053
>> Public seating: 9:30 a.m., rotunda level. Seating and parking are extremely limited.