 And welcome to Think Tech, I'm Jay Fidel, it's Thursday morning at 10. And we're talking tax with Tom Yamachika, talking tax and fiscal policy. No, don't leave. This will be very, very interesting, I promise you. Welcome, Tom, welcome to the show. Thank you for having me, Jay. We're gonna talk today about a subject that has come up often, and it's one in homelands. We're gonna talk about the historic funding, funding that is really historic, you noticed in the paper, $600 million now, the legislature is considering giving to DHHL. And that is remarkable. So Tom, for as long as I've been in Hawaii, which is 55 years, 56, 57 years I've been here, this story, the story of one homelands has repeated itself over and over again. It's about all these people waiting online for their whole lives for a piece of that land, 200,000 acres, wine homelands controls, and PS, there's a lot more it could have too. The largest landowner in the state is the state, and they can have as much land as they want, but somehow they're unable to manage it in a way to satisfy the mission of the agency, and that is to help the native Hawaiian people get housing. So here we go again, another story, deja vu all over again, only this time, $600 million. I don't understand, Tom, why we keep hearing the story, and I certainly don't understand $600 million. I guess it's burning a hole in somebody's pocket. Well, let me give you some background on the entire thing here. We're talking about the Department of Hawaiian Homelands, and what that is for those of us who aren't familiar with them, is they are an agency of the state government. They administer about 200,000 acres of public lands, and their mission is to lease it to native Hawaiians to live, farm, ranch, and engage in commercial or other activities. It's led by a nine-member commission, and they must provide financial and technical assistance to native Hawaiians defined as those with at least 50% Hawaiian blood to enhance their economic self-sufficiency and promote community-based development. And they were kind of mentioned in the Hawaiian Homes Commissions Act of 1920, which as you can tell from the date, greatly precedes or even being part of the United States of America as a state, so it was about 38 years before. In practice, however, moving native Hawaiians to homestead lands has been an agonizingly slow process. We have some other nonprofit organizations that have reported that the list of native Hawaiians awaiting homestead land leases has been growing steadily. In 2010, the list was about 26,000 people. Today, it's more than 28,700. It's no exaggeration to say that scores of Hawaiians have died on the wait list. That was always the case. That was the news reported when I first came here, that they're dying to get these native Hawaiian lands and they're not getting them. Dying is absolutely correct. No exaggeration there. Now, this year, our legislature wants to do something different. They are proposing to give $600 million to the Department of Hawaiian Homelands. They think that this would be a great thing to clear up that backlog. And the question is, can they do it? Now, the reason why- What's the connection between money and clearing up the backlog? What do they need the money for? A lot of these, the 200,000 acres, it's an uninhabitable land. It's forests, cliffs, land that really nobody else wanted. So some money has to be expended to swap these out into people, into lands that people can actually live on. So you got to do that. Can't the legislature do that in one fell swoop? As I mentioned, the largest landowner in the state is the state. They can do that with one stroke of the pen without costing anything. Well, if they could, they probably would have done it by now. I'm sure there are a lot of complications and things that have prevented that from happening between 1920 and today. I mean, it's been a hundred years. Okay. And you got to put infrastructure in the land. You have to get permits. You have to build houses and then people can move fit, right? And getting these permits, for example, is no easy task, especially if the land is, let's say, not viable in its current state. Now, the reason why we're concerned about this is we've been following, we've been following the Department of Hawaiian homelands for some time. Back in 2015, we wrote about agencies that received federal grants, but were unwilling or unable to spend the money. At the time we listed DHHL as having $55 million in federal housing funds awarded for native Hawaiians, but unspent, resulting in HUD, the Department of Housing and Urban Development, suspending additional funding. Okay, and let me kind of give you an indication of what we had back then, okay? In 2011, we got a federal grant for $12.6 million. We spent as of 2016, when I wrote the article, we'd spent about a quarter million and it encumbered pretty much the rest. In 2012 and 2013, we basically got $12 million a year. And the notes on the account where that they had moved the monies to an investment account in October of 2013, query whether they could do that. Because the feds are giving to us to spend, not to invest. In 2014 and 2015, we got $9.7 and $8.7 respectively. And at the time I wrote the article in October of 2016, the department wasn't able to spend any of it, okay? Well, that's always a big question, and if you're looking at, if the point of view of the tax foundation of Hawaii, you're concerned about the fact that that's tax money that somebody had to pay that into government, whether it federal or state, and then it languishes. Let me ask you in general, Tom, why does this happen? Why do funds that are given to an agency like that not spent? Is there a good reason, is there ever a good reason? Well, the reasons that the agency had given in the past were, geez, we can't get permits, we can't do the necessary grading, we can't do the necessary installation of infrastructure, no, we can't do this, we can't do that, okay? And the question, at least in my mind, is what's happened in the 10 years since I wrote the last article, okay? And let's get that slide on the screen to show what's happening today, okay? What this shows is the federal block grants that were allocated to the Department of Hawaiian homelands and their current funding status as of like yesterday, when I pulled this down from their website. And it's not my website, it's their website, Department of Hawaiian homelands website, okay. So they've spent about 80% of 2014 money, 2014. 2015, they spent a sliver, like $60,000. In 2016, HUD had enough and they said, fine, if you're not willing to spend our money, we're not gonna give you any. And they didn't, that's why you see the goose egg in 2016. And then 2017, 18, 19, somebody probably in our congressional delegation probably convinced HUD that, yeah, we gotta give them some money. So they did, but none of it's been spent, none. So none of it's been spent. Probably, yeah, I'm just trying to connect the dots of what you're saying is, okay, so we have this land that is some of it, maybe a lot of it is unusable. It needs topographical change, earth moving, or it needs to be swapped for other land, which is more usable. And then when you finish with that, you have to build infrastructure, that costs money. No matter who you are, that costs money. And then you have to build houses where you don't have houses and there aren't houses. So that costs money. Let's assume just for this discussion that it costs $100,000 per house, okay? And by the way, there are some homes in Lanai city that Hawaiian homelands built years ago with the help of Murdoch, remember Murdoch who owned Lanai before Ellison did, he helped them, he gave them money. And they're really nice homes. They cost much more than $100,000. They're upper middle type homes. And that project stopped for some reason, even though Murdoch offered more money. I'm not sure what happened, why homelands didn't take that money and build more homes in Lanai city, big question. In any event, so if I multiply $100,000 times 26,000 people on the waiting list or 28,000 people on the waiting list, it'll take a long time and a lot of money to do all of that. So 12 million, 10 million is peanuts when you're trying to spend 100,000 times 26,000 or 28,000 to get where you need to go. But to spend nothing means no forward motion. No forward motion in earth moving, in swapping, in infrastructure or in home building. It means you're stuck completely in that, I was going to say inept. I meant to say inactive, static, no forward motion. Am I right about that? We call that a Freudian slip. Yeah, well, maybe sometimes Freudian slips are accurate, but nothing has happened because there has been no money. And then when you get money, you don't spend it. And the money they got until the 600 million really has been completely inadequate to do anything significant. With these lands and with this list. So even the 600 million, if I divide, maybe you can do this, you have more training in arithmetic than I do. If I divide 600 million by say, just for this discussion, 100,000, how many homes is that? How many people on the waiting list is that? Okay, let's bring out the calculator. 600 million divided by 100,000? Yeah, I think it's 6,000 homes. Yeah, 6,000 homes. 6,000 homes out of 26,000 or 28,000. If they spent every single penny on doing what we were talking about here, and if we're assuming a relatively cheap house for 100,000, that's a cheap house now. It's probably closer to 200,000 or three. In any event, that only gives you a fraction of the list. This is still not making progress even if they get to 600 million. Well, I mean, that's true. But sometimes you just got to chip away at things. Chipping away for 100 years, got it. Yeah, that's what they're supposed to have been doing. Did they? No. So I think we've got to get some organizational fixes in the organization to make sure that they have the correct tools and the correct staffing to do what they need to do. Maybe they need more positions. Maybe they need to hire some architects, engineers, or whatever it is. Isn't it management, though, Toms? Seems to me, you can get staff, you can get architects and engineers, you can buy them in-house or as an independent contractor. Not if you don't have authorized positions. We're talking about management. We're talking about the people at the top who are steering the ship, aren't we? Well, you've got to have authorized positions first. They've got to manage it. They've got to board. Why can't these people do anything? Well, you've heard the excuses. We can't get through the firmament thing. That's probably the one I've heard most often. What do you do? Is it ineptitude? Is it corruption? What is it that locks them up this way? Maybe a little of both. We've had a big corruption scandal rock the legislature just a few days ago. With stuff like that happening, with the stuff that's happening with Roy Amemi, Donna Leong, and so forth in the city, we're just kind of wondering what in government is happening. Are we in fact corrupt? And if we are, how can we ferret this out? How can we fix things? The people deserve a government that's honest. And people who are willing to do the right things for the population as a whole. Now, I have no doubt. And of course, the Native Hawaiians, too, say it again. And I have no doubt that there are lots of people in government who are honest, who have this passion, who want to do the right thing to serve the people. And the question is, why are they being led astray? Or are they being compromised for some reason? If you accept my proposition, my inclination, my intuition, that this kind of problem that we see in Hawaiian homelands is really a function of management, not staff, and not professionals. It's just management. There's two things that come up in that context. And it's probably so in a lot of agencies. One is the manager was not well-selected. Two is on top of that, that the board of the manager, the board that's supposed to be supervising the manager, working with the manager, overseeing the manager is not well-selected and not functioning. And the third is that in the executive branch, which is supposed to be watching all these agencies, nobody's home, nobody's watching them. Those are the possibilities logically that come to mind. So which combination are you most concerned about in this context? Basically all three. I mean, you've got, you know, a few weeks ago, Jay, we had a similar discussion about the department of land and natural resources. We had a guest that came on our show to talk about, you know, how, you know, he was trying to do the right thing inside the agency and how he was being stopped by management. Let's me question, you know, is the same thing going on here? Are people who are, you know, who have the, you know, the heart who have the passion, are they being, you know, given brick walls by, you know, people who, for whatever reason, are impeding the progress of, of progress? Well, I mean, what makes it worse here is that, you know, the whole, obviously the whole purpose of this agency and the, this 200,000 acres and the money, whatever money has been given to them, federal estate over the years has been intended to help the native Hawaiian people. And it's very clear in our time, increasingly clear that the native Hawaiian people need help. A lot of them are homeless now. A lot of them are on the poverty side of the line. A lot of them are having trouble, you know, socially and educationally. And they need, they need all the help we can give them. And here's an agency that is at the center of that. More than any other agency, this agency can help them lift themselves up with, with, with housing. Housing builds families, builds jobs, careers. It builds, it builds a people. It builds a culture. And it allows for the development of a, of a, let me, let me kind of go back on one thing that you said, and that is, you know, what agency is it that is really taking care of this? We have, we have OHA as well. Okay. And maybe the problem is that, that, that we've got, you know, two agencies doing different things. And maybe they're getting in each other's way. Maybe they're not being coordinated. That's almost a certainty. Yeah, maybe, maybe one thing that we have to do is, is get them to merge. What exactly is the difference? I mean, in terms of helping the Hawaiian people. Well, the department of Hawaiian homelands is supposed to be more focused on disposing of the homestead lands. And they're doing different properties that 200,000 acres and, you know, getting, getting people on homes. OHA is supposed to be doing get, you know, everything else. What is it doing? OHA. Yes. I know they have a lot of educational programs. They provide native Hawaiians with other kinds of assistance. They have. Assistance to cultural programs and that kind of thing. You might want to ask our, our think tech co-host, who's one of the trustees. I'm sure he'll have a lot to say about that. Strikes me that the state government needs a good, a good look. And, you know, that takes me to one point I want to mention to you is that there's a provision of the constitutional calls for a constitutional convention every 10 years. We had one in 1978. We haven't had one since. And I think state government needs a good look. Good, a good bath and shower, if you will. And we're not doing that. We're not, you know, the executives from state government. We're not doing that. We're not doing that. We're not doing administration to administration. Don't do it. I don't think anyone's doing it. And it needs the people to get back in there. Have a convention and take a look at this. Don't you think? Well, there's got to be somebody who's going to drain the swap, right? We got a swap that needs to be drained. Isn't that what you're saying? Yes. I hate to use that term, though. In the national politics of the day. Yeah. So this is just one example of it, right? And it's, you know, it's, it's a kind of a sacred cow. Nobody wants to take a really hard look at either Oh, or Hawaiian homelands. Because it's a sacred cow, you know, and it belongs to native Hawaiian people, native Hawaiian managers and so forth. But it doesn't mean it can't do better that either of them, or both of them can't do better. Right. And. It also turns out that there are, you know, a number of very vocal native Hawaiians who don't trust government at all. And. And think that. They're, you know, the government that we now have is not legitimate. And that we should do, you know, be rolling back to the kingdom of Hawaii. There are some people who think that we should have that the, a native Hawaiian should have the same status as native, Native American Indian tribes. With their own governance and their own land. That's not that that's not something we did here. No, but we have alternative arrangements. And so we're just going to start with the next question. I'm not sure what it is, but I think it's probably the most homelands and then later. Oh. So the question is whether these organizations have realized their mission, their goal, their identity, the vision that existed when they were created. And the answer is. It's a hard question. It's an opinion. It's probably not an exciting answer. I guess, you know, what one question we should discuss though. Is the fiscal aspect of this? lot of money. How come, you know, with a history of about 10 or 12 million in recent years, with a history of not being able to spend it for whatever reason, now all of a sudden the ledge is taking our tax money and giving $600 million to an organization that has never received that much? What's the purpose? What's the motivation? What is going to happen with that? Well, I think there is a sense that at least from the legislature, the legislators that I've seen read about on the news and so forth, that a number of them do have a passion for at least attempting to remedy the injustices that were visited on the Hawaiian people by the U.S. in the early 1800s or so. And there's no, there's no doubt that something, you know, something bad happened. But at some point, we've got to let, we have to let bygones be bygones and we have to kind of go on with our lives if we, you know, if we think that there is justice and fairness in helping out the native Hawaiians, which I think everybody thinks there is, then we ought to execute on that. But I mean, come on, let's make sure the execution happens correctly and doesn't, you know, get mired in some morass of ineptitude within the agency corruption, which may or may not exist, you know, permitting devacles where corruption did exist and we don't know if it's still there and things like that. Well, you know, it seems clear, at least in my time of observing this, that Hawaiian homelands has never really been an effective agency. At no point in the time I've been here was the general sense that Hawaiian homelands was an effective agency. And the stats you gave over recent years really demonstrate that yet again. And it has some performance mission and there are all these people out there literally dying for some beneficial interest and not getting it over a hundred years. So if the agency is, you know, badly organized, badly managed, whatever it is, whatever it is that has created this efficiency, how does the $600 million improve that? What I mean is, what's the accountability? Is there accountability? Because if I give $600 million to an organization that can't handle it, it will wind up in an investment account again or wasted and in any event not really used for the purposes intended. How do we control? I mean, in tax foundation would be concerned about fiscal management, fiscal accountability. How do we control where it goes, how it goes, how it's spent, what benefit is derived? Well, supposedly that's a function of the legislature. They oversee all the executive branch agencies. They decide how much budget they're going to get. They have extensive budget briefings before the session starts. That's when we can do it. And if it's not working, we have to do something more drastic. What about the state auditor? I think he's weighed on this as well. He's weighed in on this as well. Well, you know, I think the amount of supervision ought to be directly proportionate to the amount of money, don't you? That would make sense, yeah. So if this is a huge jump, a jump by how many, 50 times, you get that right? Well, using that theory, we ought to, you know, give a lot more scrutiny to things like the Board of Education, Department of Health. They are spending the lion's chair of state money, Department of Human Services. Yeah, I mean, we have to make sure, and I think our legislators are tasked with making sure that, you know, fiscal oversight happens. Well, I guess one other question is derivative is, do we have that money? I mean, last time I looked, you know, I've discussed this on and off for years. I mean, we don't have much money. Tax base is shrinking. We have all kinds of unliquidated obligations to pay and liquidated obligation to pay, including, for example, the employee's retirement system, which is largely, you know, unpaid. Do we have $600 million we can spend on this? Is somebody helping us with the 600, you know, is HUD helping us? Is anybody helping us? Or is it out of the taxpayer's pocket? And if so, can we really afford that with all the trouble that you and I have been talking about for the last couple of years? It's like anything else. You know, government has limited funds. It's got to do, you know, a means of allocating to figure out where the funds are best spent. That's the constitutional function of the appropriation process. And that's what we're trying to, you know, make sure happens. What else can you do? And why 600 million? Why not 500 or 800? Is there, you know, a code look here? Is there some liquidated amount that we should focus on? Is there some analysis that drives us to that number? Not that I'm aware of. Okay. We're just about out of time. And I want you to know that I'm not feeling really good about this news item. But I wonder how you're feeling about it. And I wonder what message you would leave with people who, you know, potentially observed what the ledge is doing, what the executive is doing, and what this agency is doing. What message would you leave with them about this, assuming they do have some oversight? Well, they do have oversight. And my message to them is to exercise it. You've got, you know, you have a problem that's been festering for 100 years. You can't just simply throw money at it and hope that it'll solve itself. There's got to be, you know, more direct action taken to, you know, help stuff from the inside. Like if you have a football team that, you know, is scoreless in 28 games, don't you change the coach? Do you change some of the players? Of course you do. So we have to think about doing the same thing. You need to, you know, change up the plays that these football players are executing. Of course, right? If strategy one doesn't work, try strategy two. And, you know, various forms of this I think are needed to get this agency out of the pickle that it's in. And, you know, it's really our problem as well as taxpayers because we're funding this. It's our money. We got to, you know, we got to be concerned about this. And let us, they towards know that they ought to be doing something about it. You mentioned that you wrote a piece about this some years back. And now here, here we are talking about it. I don't know if there's a whole lot of follow-up in the media. What's your advice to the media about this issue? Not only the issue directly related to on lands, but the issues we've been talking about today. In other words, helping native Hawaiian people in a way that was originally intended. What's your advice to the media about this? Well, for one, go on our website, which is tfhoi.org and put in a search term like DHL. Read the information and follow up on it. That's a good way to start. Yeah. Okay. And for us here, I'm so happy that you brought the subject up. But for us here, we should continue and we should look at this and we should see what actually happens in the legislative session and what actually happens in homelands and how the list is in six months or a year. Will it stay at 28,000 people waiting? Will it go down to 27,000? Will it go up to 29 or 30? I think somebody should cover that. We can cover that, Tom. Sure, we can cover that. Thank you so much. Tom Yamachika, president of the Tax Foundation of Hawaii, joining us here on Talking Tax with You Know Who, Tom Yamachika, thank you so much. Thank you so much, chair. Aloha.