 Yeah, okay, we're back. We came back. We came back on a Thursday at 10 a.m. And we're here with Tom Yamachika, tax foundation of Hawaii, and we have some really disturbing news for you about things that have happened in the legislature. Welcome to the show, Tom. Oh, thanks for having me on the show, Jay. Are you as disturbed as I am? Well, it was kind of surprising seeing all the inflating that's going on. So we wanted to kind of give you an idea of some of the backstories that go in at our large square building there on Baratanya Street. Well, how about the gift to the teachers? I think it's, where's talking about that one? Okay, today we're gonna be talking about House Bill 613. And ultimately, this is how it started. Okay, it's a very simple bill. So it's what we call a short form. It says absolutely nothing, but it does have a title. And... That's the whole bill we're looking at, that's everything? That's the whole bill. That's what I call a short form. You're gonna have a bill of 1,000 pages or five lines, interesting. Yeah, obviously you can't sign that one into law, but what it does is it gives you a placeholder in case you wanna introduce something later after the legislature has started rolling along. That's kind of what happened. So it turns out that when the legislature was rolling along, then there came the possibility of having a lot of education aid in terms of like ESSER funds and similar grant funds that would be made available by the federal government as part of the American Rescue Plan Act. So what the committee did quite properly, this is the House Education Committee, is they took this short form bill, had a hearing and said, we're gonna amend this bill and we're gonna recommit to our committee for the purpose of hearing the bill once it has contents, okay, which is fine. So the bill gets recommitted and there's some language then put in it to expend the federal funds that they are anticipating. Specifically, they wanted to ensure that federal maintenance of effort requirements, and we've talked about that a little bit before, as applied to our DOE are complied with and we're spent according to the collective bargaining agreement, at least as it applied to those at the school level, so far so good. Now, things started happening when this bill crossed over into the Senate, okay. The Senate Education Committee changed those employed at the school level to those employed at the school level in the classroom. And what that meant basically was teachers. Excluding everybody else in the schools, principals and all the non-teaching staff. Yeah, and that's where the fireworks started. Because once you had that language in there, then HGEA, who represents the administrators, the principals, the vice principals, the custodial staff, cafeteria staff and office support workers said, hey, what are you guys doing? In other words, me too. So there were those in the Senate who wanted to basically support the teachers to the exclusion of all else. And HGEA, which of course has a considerable amount of influence representing lots of government workers, started stamping its feet up and down. They submitted some very incendiary testimony to the House Ways and Means Committee in strong opposition to the bill as it was then. Can you give me an example of what you mean by incendiary? Okay, let's see if I can pull up a nice quote here. And here is Randy Pereira talking. It's not as incendiary as he normally is, but he says this measure should be amended to require the BOE and superintendent of education to implement the use of these funds as intended by the Congress for all school level employees and not limit the use of funds for classroom staff only. Anything less is a disservice to the many support staff who keep our schools operating and care for our students. So, you know, it sounds pretty good, right? Ways and Means didn't change the language, it went to confidence. Okay. And then... The SHEA didn't have enough clout. No, I think the thinking was, well, you know, we're too lazy to change it now, but we're gonna have a House Senate conference anyway because the Education Committee amended the bill anyway. So let's kind of hash it out in conference. Okay. So the conference committee meets and here's one of the things that they come up with. Now, not only do they replace the generalized appropriation of the ESSER funds and other federal aid, they get to a lot more detail. So they start talking about, well, yeah, we'll give all manner of programs, you know, like learning laws, charter schools, facilities for safe reopening, software subscriptions and licenses, and even an automated greenhouse pilot program. Okay. The schools of high schools in Kohala, Mahai Naluna, Kauai, Waiyalua, and Mililani all got a cool million to do an automated greenhouse pilot program, whatever that is. Kodakopia. Hey, it's federal money, so as long as it sounds good, right? Well, I'll talk to you about that, but go ahead. Okay. But then came the clincher and here it is, the monofram heaven. This language appropriates a 29.7 million for the purpose of educator workforce stabilization to retain teachers, provided that money is appropriate, shall be used for a one-time stabilization payment of $2,200 for each teacher. And that's what the first conference draft said. Now, each teacher can be fairly broadly, you know, interpreted. So if I'm a substitute and I go teach in one day in a year, and I collect maybe 75 bucks, I'm knowledgeable for the 2200, isn't that great? Fortunately, people kind of woke up before that got passed into law, and what they had to do was they had to amend it on the floor. So they hurried up and went to the house floor and introduced a floor amendment and went to the Senate to introduce the same floor amendment. And the floor amendments were introduced and changed the language to each full-time and half-time teacher. Okay. But there are a couple of problems with that. One is it's still only teachers. Yeah. Okay. So that doesn't solve HGE's problem at all. Second, whatever happened to the collective bargaining agreement because our teachers are unionized. They get paid whatever the collective bargaining agreement says, and the administration, in fact, has teams of negotiators and they have a collective bargaining office whose sole job is to negotiate with the employee unit. And so this monofram heaven, we're bypassing all of that. And it is saying, oh, let's throw some stimulus payments at the teachers, even though it's not in the collective bargaining agreement. So they bypassed the whole system. Pretty much, pretty much. So I think, go ahead. So this is the version that's being sent to our governor to sign. And obviously one of the comments that he's gonna get is from HGEA, and he's probably gonna be urged to veto that part of the bill, if not more. Okay. The good thing or the bad news, depending on your viewpoint, is that this is an appropriation bill. So it can be line-itemed. The Hoy Constitution says that in an appropriation bill, if the governor doesn't like one or more appropriations, he can line-item it out. But other bills don't have that same flexibility, namely that when you have a large complex bill with multiple layers of tax increases, like what we've been talking about, House Bill 58, the Enoligate Franken bill, that one's either up or down. So you sign the whole thing or veto the whole thing, there is no in-between when it's not an appropriation bill. And so this is kind of where we have it in terms of what's being presented to the governor. What do you think he's gonna do? I think he's really gonna have a tough decision. I think, and I guess to a, in at least one news report, he publicly said that he was not comfortable with having this money come down from heaven, given the fact that he's got an office and his office is supposed to negotiate with the union. So he may pick up his pen and line-item that appropriation out. I wouldn't be at all surprised if he does that, given the fact that we've got two Titans, the HGEA and the HSTA, clashing over this one provision. I think if it were ordinary people like taxpayers objecting to a bill or an appropriation, it might not get heard so easily, but you would think that when it's HGEA and HSTA, they both are in the governor's ear all the time. So there's gonna be some action coming under this. What it is, we don't know yet, but at least here we've got a good chance of the veto pen being wielded. He would have to put that line item on this list of veto inclinations, which comes out pretty soon in June. Yeah, the next legislative deadline is June 21st. June 21st is the day by which the governor has to put out a list of intent to veto list. So any bill that is not on the list is basically gonna become law. Okay. Either by signature or silence. Either by signature or silence. But if a bill is on the list, then by July 6th, the governor has to make the decision as to what to do about the bill. Sign veto line item, you know, whatever, but it has to be done by July 6th. So those- What would you do? I would line item it. If I were the governor, I would line item it. Why? Because, you know, as I mentioned before, that's why we have negotiators and that's why we have a collective bargaining agreement. The legislature's job is to, you know, fund the agreement after the negotiations with the unions have been concluded and everybody's signed off on the collective bargaining agreement. If they have a problem with how the department's run or how the administration is spending their money, then, you know, they take that up with the administration, not with the union. Because that's- Yeah, that's- So you lose control, you lose oversight by the executive branch that way and under the collective bargaining agreement and you allow any organization, any state employee type union to go direct anytime it wants. I think implicit in what you're saying, Tom, is that this would be really bad precedent because it would mean that the union really isn't bound by the collective bargaining agreement and it has two bytes at the apple, which is not what was intended either in the law relating to labor relations or, you know, in the development of the collective bargaining mechanism to give them two bytes at the apple is giving them much too much power. Yeah, this is a classic case of divide and conquer. Everybody learns this as a little kid, right? If you don't get, you know, if dad don't give you what you want, you go to mom. If mom don't give you what you want, you go to dad and sometimes you get what you want out of the other parents, sometimes you don't. But it works really well if the two parents aren't communicating with each other really well. Did anybody raise this with the legislature and say, wait a minute, this is bad precedent. This is not the way it's supposed to work. Keep your hands off this one. Did anybody say that to them? Not in so many words, but at least not what we've seen in the testimony. But of course, a lot of things may be whispered to the appropriate officials behind the closed doors, so to speak. In the legislature? Of course. Yeah. Well, I'll tell you where, you know, just some thoughts I'd like to bounce off you about this. Aside from the collective bargaining violation, if you will, and the intercession of the legislature where it shouldn't have gone, there's other issues too. And that is the power of the unions in general in this state. My first question is, if this manner from heaven bill had not happened, am I right to conclude that it would have gone into somehow into the general fund and the money that this manner from heaven bill is spending could have been available for other purposes to benefit the state? Am I right about that? Mostly, this is federal monies, so it has to be spent on education. And so as long as you're fulfilling the purposes of the federal act that gives you the money, you can spend it. So it can go to purposes other than teacher salaries, yes, but it still has to be spent for education. And the other part is, what is this supposed to, what the deal with, well, it's for the benefit of the teachers who might otherwise leave town, including part-time teachers now who might otherwise leave town. And I'm saying that, but this, you know, if you're in the military and your time for re-enlistment comes up and they give you a re-enlistment bonus, you're now obligated to stay for the, really obligated under the Uniform Code of Military Justice, you're obligated to stay for that period of time. You can't take the money and walk. Right, right. Is there anything here preventing these very same beneficiaries of the matter from heaven, from taking the money and then taking off? Not at all. So, see, that's why it's really important to, you know, when you're dealing with labor relations at the government level, to go through the administration, to go through the unions and make whatever conditions you want part of the bargaining agreement. You bargain over what people get and you bargain over what services you get for the money you pay. And, you know, that's supposed to be the deal. Yeah. Oh, okay. So, you know, there's a real question about what this bill is really, really doing. And, you know, if you ask me, I'm just a bystander and observer. I say, well, this is just a big giveaway. There's federal money coming in. Let's glom on to it. Let's, you know, get it to our constituent members of the union as fast as possible in any way possible. Let's make them feel good. Let's take it. So on the table, let's take it. Without any real regard for education in general, without any real regard for the welfare of the state and the citizens of the state in general. And this suggests that the union is being irresponsible in merely taking the money, giving it to teachers without any quid pro quo, without any benefit to education. So that would be my, you know, knee-jerk reaction here. And I am thinking that the union is too powerful. The union is the only one walking the floor or doing lobbying. And there's no countervailing lobby group or, you know, party constituent who representing the citizens of the state that is saying to the legislature, don't do that. This could be much better spent. This is just a grab. What's your reaction? No, I mean, again, you need to, go through processes to make sure that you've got the correct people bought into it. You need to make sure that you're getting value as a taxpayer for the money that you're putting in. And just tossing it out the window and letting it fall to a select group of people, that's probably not what you want to do. Again, it's in derogation of, it disregards the collective bargaining agreement and really incentivizes, you know, not only teachers, but everybody else to play the same game of divide and conquer. So at the end of the day, if this is kind of the precedent that you're setting, you may have a big free-for-all in government as all of the unions go and, you know, push, push, push for non-bargain for benefits. Couple of thoughts on that. Number one is, I think, you know, one thing that has to be said is that if the collective bargaining process had been in play here, if the governor had been, you know, more aggressive about this and seen it coming and sure that he could have, then what would happen is the Department of Education itself would have been at the table. The other thing is- Actually, the board was there. You know, the board was giving testimony to the legislative committees when it, you know, when they had the opportunity to do that. I'll take that, but bottom line is it had no leverage. That is true. Yeah. Anyway, that's one thought. I'm concerned that we don't have an even playing field here. We have the unions and whoever else wants to do it, you call it a, I forget to turn me used but I would call it an end run. This is an end run. You bypass the regular procedure, you just go for the bucks. And if you have the cloud, you lobby the legislature and they warm to it. We have to get out of that mindset. Yeah. And, you know, to their credit, you know, the Board of Education, the Board of Education, you know, that Catherine Payne, she's her testimony was basically, you know, look, can you kind of like get out of this? She said, rather than directing the board and department on how to expend on recurring federal funds, it's more suitable for the latest to determine how much general funds it can appropriate to maintain as many resources as the classroom level as possible. Governor E proposed to give back approximately 123 million in general funds to the department following the council on revenues, revised revenue projections. The legislature could ensure as minimal impact to the classroom level as possible by appropriating these previously unavailable general funds as necessary or going a step further and restoring the department's base budget. So what I get from that is, you know, guys, we really don't need that much help. Just, you know, restore our money, we'll spend it. You don't need to tell us how to spend it. You know, get your, you know, grubby paws out of the process is what I, and reading into this may be too much, but that's kind of what I'm reading into this. Well, you know, if you shake it and back it, what happens is a specified group of beneficiaries get money in their bank account. And this is supposed to keep them from, what's the word, stabilize. This is supposed to stabilize them in some way. Right. I'm not sure I see that as an appropriate way to manage the economy or the educational system. There are a lot of other needy people in the state. I mean, we do a show on restaurants, for example, a lot of them going out of business, a lot of small businesses are going out of business. A lot of people in this state are needy because of COVID. And they don't get any part of that money directly or indirectly, not a penny. So what you do is you shower money, it's a lot of money considering there's no quid pro quo or control of it. You shower money on one group in the community and not on others. And there's got to be better planning. It can't be lobbying a gift to one group. This is not the way we do with the markers. Yeah, I mean, certainly the legislature is there to set priorities. And one of their priorities, of course, and understandably is you take care of the least fortunate among us. I mean, that's a legitimate priority. But then you also have to understand where it's coming from. And this is I think the part that they're having trouble with, where it comes from is you've got to take it from other people purely and simply. And then the idea then is, what's the science of it? Who do you take it from? How do you take it from them? Do you base it on income? Do you base it on the business activity? Do you base it on their profits? Or do you base it on activity whether or not it results in profits? So those are the kinds of questions that the legislature is being asked to answer all the time. And I really do think that there is a danger in getting too much involved in the nuts and bolts of who is the money going to and when and how. We just need to make sure that the priorities are dealt with, the agencies are supposed to be the ones who pay their employees and get the work that's required done, query whether the work that's required is getting done. But that's the subject for another show probably. Well, yeah, but I think from what our discussion was today, I think we can make some conclusions. And the primary one for me is that we were coming out of COVID now. Our economy has been damaged. Our workforce has been damaged. A lot of people have left or are considering leaving the state for the lack of a viable economy as it affects them. This is a very compound, complex question. It requires the best thinking that we can obtain from government. All parties on deck, they all got to be thinking about those priorities you talk about. Somebody has got to get a comprehensive analysis going of every element in the economy of our state. And to do it ad hoc, one gift from manner from heaven at a time based on one lobbying group at a time is not a comprehensive solution in any way. In fact, it's just a giveaway. And if you ask me whether the legislature gets high marks on that, it doesn't. If you ask me whether the governor gets high marks on that, it doesn't. But I think the message we leave and you can agree or disagree is that it should be line items and we should all be watchful. It doesn't happen again. Yeah, we certainly need to respect the process and not micromanage, which I think maybe what's happening here. So let's hope that our lawmakers and our governor to do the right thing and respect the process. Yeah, and let's hope they can develop a comprehensive plan to reinvent, reinvigorate the economy of the state. That's the highest priority. It's very complex. And it goes beyond what the challenges they've had before. It is critical to the future of the state. That's what we gotta focus on. This is not an example of good focus. Anyway, thank you, Tom. Tom Yamachika, Tax Foundation of Hawaii. I so enjoy these discussions. I think they are very important to the public conversation. Thank you, Jay, for having me on the show. Aloha.