The ceded lands — historically, the former Hawaiian crown and government lands ceded to the federal government after the kingdom was annexed to the U.S. — are one major source of revenue for the Office of Hawaiian Affairs, created in the Constitutional Convention of 1978.
It’s been a longstanding argument that OHA has not received the full measure of ceded lands income that the state Constitution promises: a 20% share. Other beneficiaries of the funding, according to the Constitution, are public education, farm and home ownership development, public improvements and general public uses.
This session, the state Legislature is coming as close as it’s ever been to at least beginning a settlement with the agency, which oversees the Native Hawaiian Trust Fund and the benefits it provides to Hawaiians through OHA programs.
The vehicle is Senate Bill 2021, which is moving to a conference committee for a final decision, the committee members already named. But based on testimony from officials concerned about the impact on other state functions, there is a lot more work to be done, work that would be best accomplished by a separate group capable of hammering out the key fiscal points of a final agreement.
The outlines of the deal would increase what revenue the state transfers to OHA to $21.5 million, up from $15.1 million, each year. In addition, the agency would receive about $31 million, 10 years’ worth of ceded land revenue now being held in a state account.
Beyond that the state still needs to settle exactly what is meant by revenues subject to the OHA claim, and how much additional revenue would be in the annual payment. The two sides are far apart: OHA asserts in its analysis that the annual take now should top $78.9 million, while some competing state agencies don’t want to see the yearly draw go up significantly.
The latest draft of SB 2021 would convene a working group to address this disconnect. However, a stronger argument was made by Craig Hirai, director of the state Department of Budget and Finance.
In testimony given to the House Finance Committee, Hirai said the department “strongly recommends” establishing a Public Land Trust Revenues Negotiating Committee, an element in the original draft of the bill. In order to make real progress toward a settlement, an entity equipped to work through the complex issues and make some brass-tacks calculations is necessary.
There are many legitimate reasons the public should be watching what happens here. One is the concern raised by the University of Hawaii and other state agencies that they would lose too big a cut of funds, compromising their ability to fulfill their own duties.
For example, UH is worried that some of its revenue assessed to cover educational costs — tuition, fees, grants, federal funds — could be unfairly tapped. Officials rightly argue that this could hinder the university’s own educational mission.
The other primary cause for hesitation, of course, is OHA’s own spotty record of fiscal stewardship. Most recently, OHA’s practice of forming limited-liability companies to hold its assets came under scrutiny by the state auditor, whose report was never completed due to a dispute over access to records.
That conflict, which embroiled lawmakers as well, was set aside last session in order to settle OHA’s budget. But it should remain as a warning sign that any funding deal going forward requires better accountability and transparency.
Whether ceded lands or general funds support a public mission, it’s public service that’s at stake. In this case, Native Hawaiians, in particular, would come out on the losing end of bad money management.
