 Yeah, bingo. We're live. Here it is on a given Wednesday with Tom Yamachigo who usually appears on a Thursday. Hi, Tom. Welcome to Talking Tax with Tom today on Wednesday. Hey, Jay. Hey, how's it going? Good. So, you know, gotten replaced. It actually made history. The Supreme Court, in the case called League of Women Voters versus the State, it made history. It changed the way the ledge works. You know, a lot of people felt that gotten replaced was an abuse, a deliberate way to avoid transparency, and now that's over. But is it over? There's two questions we should talk about. You know, one is, well, what are the fine points in that decision? What is left to interpret? How will it apply when we start applying it case by case, bill by bill, potential gotten replaced by gotten replaced? And the other thing that I would like to talk to you about is, you know, this opens the possibility of reform in general. And a lot of people have lost confidence in the legislature in the way it works and its result. And maybe we should talk about what other things need to be done to make people confident of the ledge again. So welcome to your show, Tom. Well, thank you. Let's, I think, start off with a little discussion about what got and replaced is. You know, as bills go through our legislature and are there on their way to becoming law, the one immutable rule is that the bill must relate to its title and the title can't change. But a bill can have a very broad title, like relating to taxation, or relating to government, or relating to public safety, which was the bill involved in the common as it goes through the legislature. Sometimes the House or the Senate, whoever has the bill in hand, decides that they don't want to pass the bill in its form as they then have it, but they want to pass something else. So they basically dump the contents, put in new contents, either a bill that has been heard in the session or some or perhaps something even new entirely. If they decide to put in the contents of a bill that has been killed by the other side, which happens sometimes, we call the result a Franken bill because that is basically stitching dead parts of dead things together and giving it new life. And the question then becomes, okay, can they still do that? And I think the answer is yes, and let me tell you why. One of the things that the Supreme Court didn't get rid of is to say, look, bills are presumptively constitutional, and if you think a bill is invalid, you got to prove it beyond a reasonable doubt, just like the standard for criminal cases, beyond a reasonable doubt. That's a hard standard. It's intended to be a hard standard. It is. And a lot of times these gut and replace materials have some tenuous connection to the bill that's being replaced. And then it becomes a matter of degree and how far can you push it? I mean, some of them are very obvious, okay? The one before the Supreme Court started off as a bill to require recidivism reporting and ended up as a bill to... The ending facts escaped me, but it was really very, very different from how it started. So that was a good case for them to handle because it was clear. It wouldn't be so clear locusts. Right. And let me give you some other examples. In 2017, there was a bill that won the Common Cause Legal Women Voters Resty Scalpel Award. That award is given by them to the bill that least resembles the form in which it was introduced. Okay. And the 2017 winner was a tax bill. It started off as a bill to amend income tax rate to negate any income tax liability for those at or below the poverty threshold. Okay. So it was basically income tax, eliminate a bunch of brackets. And what it turned into was a bill that appropriated a million dollars for homeless relief. Now, that, I think, is very clear. That one would violate the Supreme Court standard even today. If it were passed, it started off being a tax bill in the end. It was about spending money. No relation whatsoever. That I think is an easy case. But let's talk about something that's perhaps not so easy, which is the 2016 Rusty Scalpel winner. What happened there was the legislature was busy working on a bill to replace the ethanol fuel production credit, which basically no one had taken advantage of, with a more broadly applicable tax credit to produce renewable fuels. When the House bill went over to the Senate and the Senate bill went over to the House, both bills contained language to accomplish this objective and had no extraneous matter. When the House got a hold of it, however, it snuck in something else, namely an organic foods production credit. It was contained in a proposed draft of the Senate bill that was posted on March 18th, which is not too far before the legislature adjourns, for a committee hearing on the following Tuesday, so four days later. The proposed draft was adopted. It went to finance. Next finance passed it out. And then the bill went into conference. Now the Senate at that point was seeing the organic foods production credit for the first time. It didn't have anything comparable on the Senate side. There were no hearings held, nothing. Okay, there were no hearings at all on the organic foods production credit on the Senate side. Okay. What lawmakers did was it took the two bills that it had gotten, the House draft and the Senate draft, the House draft had had the organic foods credit in it. And it passed out two versions, one with the energy credit that we were talking about before. And the second one with the organic foods production credit by itself. That bill passed, it became law. Question, did it violate anything? That's, I think, a much tougher case because it seems to talk to you, well, the bill's about taxes and it's about tax credits. It's like an appropriation bill, right? You start off with the bill to spend it on A, B, and C. You end up with a bill spending money on A, B, C, D, and F, and nobody's ever challenged that. So here you started off with a bill to do tax expenditures on renewable energy. And you got a bill at the end that had a tax expenditure on renewable energy and organic foods. And at the end it was just organic foods. How would you rule Justice Fidel? Well, my general approach would be, if I were to rule on this, is that if the substance had a hearing, it would be okay if it was exposed in public discussion, testimony, it would be okay. If it wasn't, it wouldn't be okay. I really don't like the notion of legislators slipping things in. And we should talk about conference committee in that context also. I may be more sensitive about this since Texas has done some of its Republican legislation because it's clear that you can have abuses. And if you're not well-intentioned, you can really pull the wool over people's eyes and come up with legislation that has nothing to do with what they might have testified about. So I would be pretty tough on it. No opportunity to testify, submit testimony, no deal. Now, I suppose that still leaves the question is what is the relationship of the final bill to what was being discussed in the testimony? And you'd have to make a subjective, I would say, determination as to the connection there, how far along, how far away it was. You know, Tom, it's almost like the way they grade exams sometimes. The grader looks at the blue book and he's looking for certain words. And if he doesn't find the magic words in the blue book and your answer, you flunk. And so the same thing, you know, if the words are different, a machine could do this. Machine language, AI could do this. If you find a certain percentage of the words are brand new, then maybe it doesn't qualify. It's almost like it doesn't have to be so subjective. But I would be suspicious in any case where something new popped in that was unrelated. Another possibility is to require more than just a title. You know, it's like when we set up our shows, we have the title of the episode and then we have a tagline. And between the two, you should be able to figure out what we're going to talk about in general. So in the case of the title here in legislation, you can have a very broad title, you know, relating to tax. You can do anything under that. What about requiring greater specificity? Matter of fact, what about making a list of subject matter, a list of topics that a bill would be classified under? And so relating to a state tax, for example, as I'm picking that out of the air, relating to a state tax. Now, that bill is going to have to relate to a state tax, not food sources. Okay. And if you're not within the category that is selected, that the outset, no so. I don't think that would be too burdensome on legislators. You just have to stay within the context, not only of the title, but the category. What do you think? Well, a lot of legislators don't like that because you would need, they say, enough flexibility to respond to emergencies or some, you know, consequential happenings that took place toward the end of the session. And let me give you another example. This is the Rusty Scalpel winner for 2014. Now, you remember Turtle Bay? In Turtle Bay, there was a land transaction being contemplated. And the state was a party to this, and it was contemplated that the state would pay, you know, a certain number of millions of dollars for a conservation easement to help keep the land pristine or whatever it is. Okay. But the question then became how they were going to fund it. So there was a bill in 2014 called relating to the transit accommodations tax. And the bill as introduced, you know, tweaked an existing $3 million earmark to divide it among special funds controlled by the Hoyt Tourism Authority and the Board of Land and Natural Resources instead of paying it over to the general fund. And so it passed the House and sent it in substantially that form. But in Converance Committee, we had the exigency of having this Turtle Bay transaction. So what they did was they gutted this bill and transformed it into one that required refinancing of the convention center debt, which largely was funded with TAT money, and used the savings to come up with the $40 million for the Turtle Bay conservation easement to provide $3.5 million of additional revenue to the general fund. And it would raise the $40 million by selling revenue bonds tied to a brand new earmark on the TAT that was specifically directed to the conservation easement at Turtle Bay. You were asking me what I think of that? I hate that. You know, how can an ordinary citizen follow what they were doing? It's not transparent. Oh, it's trickery. And, you know, you start out with one thing and you come up with another thing. How does the public feel about that? This should be easy to understand what they're doing. They should stick on it. Now, your point a minute ago is very interesting and worth discussing. And that is, well, things happen. They happen in the course of the legislative session, maybe emergencies or issues. You know, I'm always amazed when something happens and it's a headline, you know, and three days later it gets in the legislature. Does that really necessary? Is it necessary for our august legislative body to react in three days time about what's happening? That doesn't make for good legislation. That doesn't make for the careful consideration of the issues affecting the public interest. That's knee-jerk reaction. I don't think the legislature ought to do emergency like that. Now, maybe there should be a provision, you know, when you have some remarkable truly emergent situation, but that ought to be designated as such. And there ought to be a way where you can start the whole process running again with committee hearings and testimony and the like, even in the middle of the session, even outside the normal legislative schedule, so that you still have the public, you still give the public an opportunity to weigh in on this. I don't think that you should be acting, you know, so quickly. It's supposed to be a deliberative body, not an overnight, you know, quick solution. Right. And for that particular TAT revenue bond issue, in the very next year, they basically scuttled it because the underwriters didn't want to buy those bonds. And the reason, they preferred bonds that were backed by the full faith and credit of the state, not just one tax. Well, there you have it. I mean, I think this is all abusive in the sense that the public doesn't get a chance. And for that matter, the press doesn't get a chance. And the closer you get to a cigar smoke, you know, filled room, the worse it is. We need to have confidence in our government. We need to have confidence. They care about including us in the process. And they're going to be as transparent as they possibly can be. And I think it was good that Supreme Court cut this back. But I think from what you say, there's more work to be done. And there's more work to be done in the conference committee. Can you talk about that for a minute? Yeah, the conference committee is basically where the House and the Senate resolve the differences in different versions of the same bill and try to come up with a draft that both sides can agree upon. The thing about conference committee is that it's close to the public. I mean, not close to the public, but the meetings are open to the public. No testimony is allowed. And the only time you see the conferees is basically when they've agreed to something. Or if they, you know, agreed to ask for more time and, okay, we're going to defer consideration of this bill till tomorrow. That's the only time you see them. Okay. So are there arguments and so forth being made in the conference committee? No, you never see them. They're all in the back room somewhere. Well, to add on to that, the very troubled notion that the sunshine rules the sunshine statute, which is, you know, sometimes really onerous. It is a statement of slow down everything, bureaucracy, all kinds of rules that are so hard to do anything in state government for all the agencies involved. And, you know, it's like the procurement code. It's over baked, overdone. And the sunshine rules, however onerous they might be on state agencies, over years and years of discussion, they do not apply. The legislature had never applied the sunshine rules to its own procedures. And my question to you is, is that a good idea? Is that built public confidence? The key to good government is public confidence. It doesn't build good, you know, confidence in me in government to have the legislature make these decisions in the back room without anybody knowing until it's finished. Can't we do better? I think we can and should. I think there will always be some, you know, some elements of, you know, horse trading and deal making. And I think it's understandable that that legislators would not want to share those, even though it's kind of common knowledge that it happens. But really, we ought to be, I think, thinking about and talking about, you know, bills more in the merits. You know, is this, you know, a good thing for a statewide? Why not? You know, and what does, you know, passage of this bill have to do with, you know, getting another million dollars to renovate bus stops in Waipahu? Well, that actually troubles me a lot. Of course, that's an example of horse trading. And it's like, you know, what Dan in Norway used to do with Ted Stevens in Alaska make deals to provide a benefit to their respective jurisdictions and then they would get together and, you know, push for legislation in the Senate. But, you know, it seems to me that logically it's entirely possible to make legislation on the basis of the merits of the bill in front of you, rather than, you know, providing a special benefit to a particular legislators district. Is that really necessary? Why can't we just be rational about this? Again, if I put it into AI and I have a machine determine what legislation is appropriate, it's not going to consider that at all. This, the whole thing about horse trading really troubles me and earmarks. Remember, it really troubles me that we have that. Why can't we simply make these legislative decisions on the basis of the bill in front of us and how it will relate to the public interest? No backroom deals at all. You know, it doesn't smell right, does it? Why can't we stop doing that? Wouldn't that be a good reform? Sure, that'd be a great reform. Realistically, is it possible? I don't know. We've got a lot of ingrained mindsets. They're expecting to do things, you know, this for that. And a lot of times, you know, where you wind up in the legislative pecking order, hinges on your ability to deliver good results to other people. And, you know, there is, I suppose, some merit in the concept that, well, you have a legislator that's kind of protecting their own district. That's their job. And when you consider the public good, you have to give this person a little, that person a little, that person a little, you know, because we are talking about the public good. I mean, it's very easy to pervert that into, you know, tit for tat kind of thing. And that's clearly not desirable. Well, if I'm a member of the delegation, for example, in Congress, and I say, look, Hawaii needs this. And it's for the benefit of Hawaii and benefits the country too. So let's do this. And I make my argument straight on. I don't trade, I don't do horse trading. And, you know, when you, when you talk about horse trading, you're really talking about the sausage process. And everybody, you know, well, you know, you can't, it's unknowable. It's unknowable what happens in those back rooms, because it's the making of sausage, and it's a sloppy business. And everything goes into the sausage. And we don't know and can't know exactly what considerations are in play. I said, I think it's time for that to stop. Don't you think? What is with the secret method in the sausage? Why can't we address the merits? You know, theoretically, he's supposed to do that in court. Why can't you do that in the legislature? And everybody in every, I mean, I know that we're a long way from that, especially in Congress. You know, it's been politicized. And horse trading is really a politicization as well. But wouldn't it be better? I don't know how you get there, Tom. Do you legislate this? Do you take it to the Supreme Court when you can catch it? Do you say, look, you guys have an obligation under your oath to represent not only your district, but the state, not only the state, but the country. And that's what you should be doing. So nothing, you know, nothing should happen outside that focus. You know, this is a more pure form of democracy, as far as I'm concerned. But I agree with you, it's going to be hard to get there, even if you really wanted to, because the same very same people who do this and whose districts benefit by it, and therefore, their opportunities for re-election benefit by it, are going to be the ones considering the change. Whenever you're talking about a change in the legislative procedure, you're talking about the very same legislators who may be benefited by the status quo calling for the change. In this case, we had the Supreme Court intervening, and that was good. But in a lot of other cases, if you wanted to reform the ledge, the very same people who benefit by the status quo would be called on to reform the ledge. They may not be interested in doing that. Yeah, I mean, typically, I mean, when you when you really get down to it, we the people are at least theoretically have have, you know, the cards in our hand, you know, we can go in and then vote out the people who aren't doing what we're, you know, what what are supposed to be doing and vote in the people who will do what what they're supposed to do. But in practice, this doesn't have the, you know, partly we the electorate are to blame for this. How about the media? How about the media? Where's the media fit on this? In other words, I run for office. Okay. And I've been bringing a bacon home to use that expression throughout my term. But you know, it may not really be in the public interest that I do that. And I've been doing things like the conference committee switches or modification, you know, of the gradient of gotten gotten replaced. And I've been achieving certain things from my constituents. And I'm going to go to my constituents in my campaign for my my next next term of office, and say, look what I have done for you. You should vote for me. On the other hand, a fair minded media would say, wait a minute, wait a minute. That is really not consistent with good legislation. But the media doesn't say that it's one of those sacred cows. You know, you let that candidate blow his own horn and puff about his success. And you don't really rate him in terms of the performance of his obligation to the larger community. How can we change that? Yes. Well, I mean, if we have more political opponents, those are the people who are really tasked with the, you know, getting the unfavorable information about the incumbent out there, and saying, you know, I'm a better choice because of this, that and the other thing. If we don't have that, if we have, you know, unopposed incumbents, you know, how can we expect change? So why don't people run for office? Or more people run for office? I mean, you know, I know some young people who are doing that, I'm going to do that. And I welcome them to do that. I would like to see them do that. I encourage them. And they may, you know, give us a better view of things when they get elected. But why don't more people run for office? So many people will say, Oh, never. I never want to run for office, even though in a collective sense, that's really destructive to the community and democracy. If people are not interested in participating in the process, which could drive important changes. Why don't they do it? And how can we encourage them to do it? I mean, there are things that stand in the way. I mean, for example, how many times we hear, I could never run for office because they will, they will get into my life and they will find things that are embarrassing that happened 20 years ago. And they will, you know, they, they no holds barred. And I'll be embarrassed and it will hurt me. And why would I do that in the world? You know, it's like, it's like dirty pool. There's dirty pool here. I'm not going to subject myself to that. A lot of people will not run for office because of that. How do you fix that? The only limits are free speech, free speech. And the answer to that is more speech. So you kind of need to hope that the incumbents have challengers and the challengers are willing to engage to bring out the issues and sharpen the both candidates positions on them and give voters a choice as between, you know, at least two, two sets of menus. One other question and then we have to close is this. You know, the press isn't what it was. The press is different. You know, print press is different. And even the internet press is different, but social media is way different. And social media allows plenty of room to make inaccurate statements and they get through. It's very hard to stop them in not only of the First Amendment, but the speed at which they travel and the way the public accepts them without verifying. And so don't you think that part of the risk of running for office, part of the problem about selecting viable, competent candidates is that the press taking all those things and rolling it into, you know, the media may not be delivering what we would hope in terms of true statements. And therefore an individual who may be very qualified can be attacked systematically to the point where he can't win. Yeah, or that he can't really live his own life normally anymore. That's a big problem. Then there really is no clear way to regulate it. You have, you know, libel suits and so forth. But those kind of come at the back end. I mean, if that's a sufficient deterrent, then maybe the speech marketplace will regulate itself. So let's kind of hope that the people who have been purveyors of disinformation get theirs in the court system and otherwise. And I think that's kind of starting to play it takes a while, but it starts it's starting to play out. I hope so. I hope so. And one thing we haven't talked about is the effect of political contributions directly or indirectly with lobbyists. And in some cases, where one legislator has achieved a substantial amount of money and then contributes to the campaigns of other legislators, thus having a de facto control over those people. Anyway, we haven't talked about that. Maybe that's for another time. Always, always enjoy our discussions, Tom. Tom Yamachika, the tax foundation of Hawaii here on Talking Tax with Tom. Aloha, Tom.