 Okay, okay, talking tax with Tom. I'm Jay Fidel. This is Think Tech, and we're talking tax with Tom Yamachika of the Tax Foundation of Hawaii. Very important we do this. And we're on a path and the path is to try to figure out what's happening here and what's going to happen here and how we can preserve our way of life. One thing is clear though, we're not going to be able to preserve it in the same fashion it was before. And we're all going to have to be thinking about how it is changing, how necessarily or otherwise. And Tom can help us do that. He wrote a very interesting article for Civil Beat April 12th it was. And it's an article that springs off a discussion that has been happening, including the comments that Tom and I have had on this show. And is entitled Decisive Action Needed on Status of Public Employees. Why do we have to pay people not to work when other departments urgently need help? Boy, that is an important question, Tom. Can you summarize, can you summarize your article for us? Okay, basically what we were looking at is, you know, there were reports that were being given to one of our legislative committees to the Senate, I believe. And they mentioned they were paying a bunch of people to stay home and work because their work environment was not conducive to the kind of work they were already doing. And I just kind of raised the question. I mean, hey, we have a number of departments in our state that are understaffed, that are sorely needing help. One being the Department of Labor, because they are processing more claims now than they ever have been. So much so that it completely overwhelmed their old computer system. And when you when you see, you know, what the response has been, and I'm going to get to that in a little bit, it's very, very, you know, troublesome. Where were you gone? The, but the thing is that the governor, when he worked on and made his first proclamation of emergency, he said, hey, you know, we need to possibly move people among the department. So to that extent, to the extent that the collective bargaining laws of chapter 89 and so forth in our state prevent that, they're suspended. So it looks like, you know, some large amount of brain power was already applied to that issue. And they came up with the realization that, oh, they need to move, they need to move people between departments to take care of anticipated surges, which is, which is totally what happened. And then when reality hits, the, the governor's chief of staff comes to tell the committee, you know, the senate committee, oh, we have to research this. And in the meantime, we, you know, we are paying, you know, some people the statement. Many people. Yeah, hundreds of them. And I'm thinking why that's pretty much what the article was about. Okay. Well, a couple of, a couple of thoughts come to mind, you know, I remember so many people out of law school or out of college wanted to work for the state of Hawaii. Maybe that's still the case, or at least it was the case so recently. Why? Because the state of Hawaii was, you know, not that demanding in terms of the job. The nine to five job, not, you know, the expectations of your, of your employees was not that great. And you had this fabulous retirement that would provide medical for life and all that stuff through the employees retirement system. And, you know, you were represented by a union usually. And so you were protected. Your job was sort of a cradle to grave career job. And a lot of people, a lot of people did that. I remember when Earl on Xi was the, well, he was the Attorney General, somebody asked that, how many employees actually do we have in the state? And he was unable to answer that. I don't think we ever did get an answer about how many employees we have in the state. Right now I think the number of employees in the state is something around 70,000. That's a lot of people. That's a huge number of people for state government. It's bloated. And I think one of the things going forward out of this crisis is that we are not going to be able to maintain the same level of that workforce at the end of this crisis as before it started. It's just too expensive, especially in a state that's, you know, where tax revenues are way down and are going to stay way down, not only during the crisis, but after the crisis. And, you know, if they are, if they are thinking the state employees, including people who would apply to be state employees, if they are thinking that the Employer's Retirement Fund is going to be able to handle their retirements, they got to think again. Because right now it's underfunded. It was underfunded during the lingo days. In fact, Abercrombie complained about it in his campaign. Billions underfunded. Okay, you can't afford them. You can't afford them. Yeah, we're not talking just the Employer's Retirement System, which is their defined benefit pension plan, but also the EUTF, the Employer Union Task Force, which provides the medical. And that, I think, is the more worrisome piece. Yes. But, you know. Well, so when the point I was going to make is this time, so right now we have, and we just talked to Eric Gill, local five, you know, the hotel restaurant, hotel, rather, the hotel workers. And, you know, a lot of people out of work, a lot of people out of work and the hotel stopped paying them, most part. And so there is at home seeing their, you know, meager resources diminish in front of their eyes and relying on unemployment compensation, which isn't going to last that long. And whatever else is coming down the pike from the federal government, which isn't that much and hasn't come yet either. So you have a crisis going on in the private sector. But to find out that there are state employees who are being paid full tilt and who are not working and who resist through their union being repurposed into other jobs, other functions, is really hard to take. You know, what did Jefferson say? He said, make yourself useful. And that applies especially in time of crisis. So that's my reaction. How can this be happening where we have, you know, the whole state really the workforce of the whole state is under tremendous stress. They're not being paid. They don't have jobs. They don't have income. And yet we have state workers who are being paid, stay at home, not doing anything, resisting, we being repurposed to other jobs that are critical in a crisis. What's your reaction to that? Well, let me let me first, I just give you one counterpoint. And that is this is the an actual letter that the UPW, United Public Workers Union, wrote in response to the suggestion that union employees be repurposed. They say, in prioritizing the health and safety of our members and in consideration of their loved ones and the community at large, the UPW disagrees with the redeployment of employees at this present time. Placing more employees back into the workforce may serve to negate any progress we have made to fight against the transmission and spread of the coronavirus. It bears noting that the state as is the case with the nation is severely lacking in proper protected equipment. This further places employees at greater risk with maintaining social distancing and engaging in proper personal hygiene in the workplace was sufficient. They would not have been in need for stay at home slash shelter in quarters. So this is a letter from the UPW, State Director Dayton Nakane Lua to Ryker Jigawada, Director of the Department of Human Resources Development. That's that's that's basically where they're coming from. And you know, they do have some points saying, well, geez, you can't guarantee me you say four places, right? No, I think I said that's a valid point. It's a valid point. And it comes back to what we've been talking about. Say, you can't guarantee you say four places before people got, you know, people got colds, flu, whatever. And yeah, I mean, the the observation about lack of proper protective equipment is interesting. And it's probably valid because of like panic buying. You can't get that stuff anymore. You can't get toilet paper. You can't get alcohol and rubbing alcohol. You can't get face masks. There's a lot of things that that that you'd want to get if you went to the drugstore, but you can't get them because everybody's, you know, fear mongered and bought them out. So I mean, but you know, assuming that point is at least arguably valid, then you could take the flip side of it. The flip side of it is okay, if we get through the things that are, you know, reasonable efforts to make the workplace safe, then how about going back to work? How about being repurposed? How about it? And therefore, you sound like the whole thing turns on whether the state or the Fed can get its act together and provide these things that we know would help. Masks, alcohol, you know, and of course, testing. And once we have that, we're out of the woods on this, or are we? Well, I mean, that's certainly a key point. But I do think that it's really crazy to pay people to work when, you know, when the rest of us either can't work because the, because the clients have dried up where the business is prohibited from operating, or we want to work but can't get paid because the people who are going to would otherwise pay us won't have any money anymore because of because of reason number one. I think this points out, you know, I think this comes from HGEA, doesn't it? And I think that what we don't have is enough good, responsible conversation where you have a coordination, a compromises, a collaboration of the various players at the table, or who should be at the table about how we're going to do this. If they take that position, it's going backward. It's not helping in the solution. They have to be at the table. One thing that has happened is that the Department of Labor has kind of sent out the call for volunteers and they are taking over the convention center. They're going to put 500 unemployment workstations in there. I don't know if they've done that already, but they're definitely in the process of doing that. And it's going to be staffed by, you know, state government employees of all stripes, including some from the legislature. And I think it's going to include a couple of sitting representatives. What are they going to do there? What are they going to do there? They're going to process unemployment claims. Which is what we need right now. We absolutely need right now. Yeah. Yeah. That's, you know, one of the problems in the hotel workers that, you know, that we get to all these claims for unemployment compensation, but the state is overwhelmed. It can't process them. So it seems basic, fundamental that the state has to apply greater resources to processing the claims of those people who really need to have the claims processed. For those employees, you just state employees to be at home while the others don't even have their claims processed. It's really hard to understand. I guess that's enough to get you concerned about the way things are working. Oh yeah, definitely. And that's one reason why, you know, this poison pen got some action there, you know. Yeah. So what is the action? I mean, that we're all kinds of things going on about repurposing. And then the union wanted a 25% override, you know, for anybody who came out of, you know, the lockdown, the full paid lockdown. Well, there's a kind of different conversation going on right now. I think it was last week that the governor basically sat the union heads down and he basically said, look, here's what's going to happen. There's going to be a 20% pay cut for everybody except for first responders. That will be 10%. End of start. And of course, the unions went berserk. And they are- Let me understand that though. This is a pay cut for the average person, not, you know, the responders. The average person, state employee, 20% pay cut to do what? To work with, to stay at home. Good question. I don't know. But they would be knocked down 20% from their from their present payload. Yeah. I don't think that solves the problem. Unless that's for people who are actually working where I think it might solve the problem. But if people are going to still stay at home and not be repurposed, it doesn't solve the problem. And it costs the state, well, it costs the state fisk a lot of money that people sit around. Yeah. So we're talking about two different issues here. One being we're paying people to stay home. Okay. That's a problem. Yeah. And number two is the overall amount of the payroll is so big that when you've got a, you know, $1.5 billion full kick in your budget, which is what we've got. How are you going to, how are you going to make the budget now? Okay. So the obvious solutions are one raise taxes to cut costs. Okay. And what the governor apparently is proposing now is along the lines of costs. Thank goodness. And you say the unions, they went berserk over it. They did. But the conversation hasn't ended yet. What the latest post from HSTA said was that any cuts would not be implemented until 1st of June. If that's accurate across the board, then we're not going to be seeing anything currently. But definitely there are some discussions that are going to be taking place behind the scenes. But, you know, I think we had, well, what happened there, as well as what happened with the repurposing plans are really symptomatic of what we've seen in Governor E.E.'s administration who were a range of issues, including Mauna Kea. Okay. They make a decision. They're all ready to go. It's time to implement. Somebody says, boo, boo, can't do this anymore. What do you think? I mean, that's what happened with Mauna Kea. That's what happened with the, with repurposing. That seems to be what's happening with the, with the 20% pay cut option. It seems to be a common pattern. I think it precedes him. I think that happened in previous administrations, too, but not to the same extent, not to the same predictable extent. One question is, has the convention center plan worked? Are there repurposed employees, state employees there now? I don't think it's set up yet. I think it's going to be starting in a, you know, within the week. Oh, good. Well, that's something's happening. You got to give him credit for that. But my question is this, you know, okay, 20%, let's assume that it happens in June. It really should happen right away, my money, but let's assume it happens in June. Is that enough time? You follow fiscal policy. You follow the, you know, the state balance sheet, if you will. Is that enough to make up the difference, a 20% hold on, you know, what, a good part of 70,000 employees? Well, it'll certainly make a dent in it, but it just seems to me, like overall, to be really hitting the problem with a very blunt instrument. There are, I think, people who are staying at whom now whose position may not be necessary. There are some people who are severely underpaid in what they're doing. The teachers, for example, have made a case for that. There are... Well, they're working, aren't they? The teachers are working from home, aren't they? I think so. Yeah, okay. I'm not sure. I mean, definitely not in the classroom teaching class, but I don't know to what extent. The problem is you can't expect a fourth grader to get on Zoom. That's not going to happen. So you really, yeah, I guess I have to wonder if they add, if they are able to work from home with a fourth grade class or a fifth or sixth grade class. You know, it's only at a certain level of a student that you can expect them to join by Zoom. College kids is one thing. High school kids is another thing, but not everybody. So big question. We have to talk to somebody in the Department of Education. Anyway, you know, it strikes me, Tom, that this is all a looking backward kind of mindset and that the state has to look forward. And I don't know why we don't look forward. We have to have the vision to see what's at the end of the tunnel here and to modify our approach and our systems and our rules and our taxes and our fiscal policy to meet, or at least to go in the direction of what it's going to be like when things are over. How do you feel about that? Are we doing that or are we turning out back on the future? I think right now the state government is primarily in reactionary mode. You know, they may have a couple of plans that they have, you know, kind of sketched out, but they're running into all kinds of issues upon attempting to implement even the, you know, the smallest details. I mean, if they can't get this repurposing of employees thing going, even though they definitely have thought about this before, what does that say about, you know, more substantial plans like the, you know, the 20% cut or, you know, whatever is going to replace it? Well, in my view, tomorrow cannot wait. So we have to, we have to look down the pike, we have to see. And what I see, and I'm just offering this for your consideration and comment, is I see a smaller state workforce. I see a union that understands the need to collaborate on these things and not look backward. It's got to be a different world. I see a haircut on the employee's retirement system and the healthcare fund you mentioned. I see, I see different, a whole different approach on the state workforce that will, you know, comport with our fiscal requirement to balance the budget. And of course, I also see tax increases. And there must be a lot more that you've thought about. But what do you see going down the pike? It's not saying how is it going to be different, how must it be different going forward? Well, I think you're right in that there's got to be a lot more understanding about both sides of the equation. If the unions, for example, are going to stick to their mentality of, you know, we have worked hard to get these benefits, and we are not going to give them up under any circumstances whatsoever, you know, stop and smell the Plumerias. It's a different world now. We don't have the money that we used to. We used to get it from tourism and look at, look why could use empty? Doesn't that mean anything to you? And, you know, many union leaders probably want to say, oh, concern me. Yeah. Well, let's assume that, let's assume that the answer is somewhere in looking at a state workforce that has changed in size, in direction, in flexibility, in cost, both during the career and after the career. How do we get there? I mean, I think, I think it has to come ultimately from government. I don't think people are going to go pick it in the streets. That's not something you pick it in the streets about, because it's too volatile. How do you get there? You get there with a Bernie Sanders kind of guy, you know, who will take the pitchfork and run with it. You get there with some strong legislators in the state legislature. I don't think the courts count. They're going to call balls and strikes mostly. So how do you make these changes? Or does the whole thing sort of implode and people leave town because it's no longer workable? How do we make the changes? What happens if we don't? Well, I think what you need is somebody at the top who's going to basically sit the, you know, the different parties down and say, you know, you guys want to survive or not. And if you want to survive, you know, we have to start making concessions on both sides to get to something that's sustainable. Because right now what we got is going to implode. Like you said, Jay, people are going to vote with their feet when they can. They'll get on their favorite plane, train or boat and they're out of here. And then what's going to happen? You know, we don't know, but their money won't be around. Yeah, I mean, that really evokes a thought in me. And, you know, Namely, how many people do we know in recent times who have left the state? You know, and how many people are like advocating? If you're not happy here, leave the state. If you don't have a good deal or a good job or you don't think the state's going to survive these issues, problems, leave the state. And a lot of people have. I'm thinking of all the people we know who have moved, for example, to Las Vegas. But there's many destinations across the country. It's fluid. How many people have left and would still have been leaving shortly locked down. But one thing is coming clear. And I wonder if you've been thinking about this, you know, we know more these days about other states because we see it in the news. We see what's happening in California and Washington. We see what's happening in New York because of the coronavirus and the responses of the governors. And we like some of them. We also don't like others. But it seems to me that they offer, you know, not immediately, but soon enough, a beacon of hope for a better life. And if I'm a Hawaii resident and I see that say California is making great progress or Oregon or Washington making great progress and Hawaii is, you know, it's got fiscal problems that it cannot solve, then it's easy for me because I know where I'm going. And I get on a plane assuming, you know, that problem is resolved. And I go there because I don't want to be on a sinking ship. Don't you think that's going to happen here when you can get on a plane? I think it's already started happening. It's undeniable. There's been, you know, lots of coverage on that media coverage on that already. You know, we need for our government to get back on a sustainable path. We need, you know, some good leader to sit people down and say, you know, you got to do this. Or we're in real trouble. Yeah. Well, right now we're in real trouble for so many reasons in so many ways. And we can't go back to the old troubles. We have to deal with all the troubles going forward. We have to make in some ways a fresh start a clean slate and figure it out and be visionary. We need leaders who can do that. Well, Tom, let's continue our conversation a couple of weeks. I'm sure there'll be much more. I'm looking forward to your next article, but whether there's a next article within that period or not, we're still going to talk. We're still going to follow the trail on this. We're still going to talk about fiscal policy and how it's working in the square building in recess or otherwise. Thank you so much, Tom. Thanks for having me on the