 here at Talking Tax downtown Honolulu in beautiful Hawaii anyway. I'm Mark Coleman, and I'm the co-host of Talking Tax, this week's Talking Tax episode here on Think Tech Hawaii with Tanyama Chika, president of the Tax Foundation of Hawaii. I'm with the Grouch Rood Institute of Hawaii. And we both here today are going to talk about the fear of the unknown in the tax world. Actually over at the legislature where they fool around with taxes endlessly year after year. And the problem this year, as Tom writes about in his weekly column, as you wrote about in his weekly column recently, is that they have apparently, I'm not sure how old this practice is, but they're starting to produce bills. They've already gone through a first or second reading with blanks instead of numbers where there once were numbers related to tax increases. So they're proposing bills that now are suggesting they're going to raise our taxes, but they're not like saying how, like by how much. So how do you comment on a bill like that, Tom? What brought this to your attention? What prompted you to write about this? Well, it's something I've actually been writing about for many years now. Oh, so it's a long going practice? Yeah, at least for the past five or six years. It kind of started with small things, leaving blanks and appropriations so the amounts could be filled in later. But now it's kind of getting into tax bills in a way that really makes the tax bill almost unintelligible. Let's talk about some concrete examples. There's a bill that's advanced pretty far. It's probably going to pass called relating to the stabilization of property insurance. And what that bill does is it is attempting to increase the transient accommodations tax, increase the conveyance tax, increase the insurance premiums tax, at least in the current version, and reinstate a mortgage recording fee. But we don't know by how much because most of the amounts are left blank to give you an example. For the conveyance tax, they are proposing in a House Bill 2686 a surcharge for sale of properties. And the bill text goes something like this. Blank percent for properties having a value of less than $600,000. Blank percent for properties having a value of at least $600,000, but less than $1 million. Blank percent for properties having a value of at least $1 million, but less than $2 million. Blank percent for properties having a value of at least $2 million, but less than $4 million. And the list goes on. Yeah, yeah. So we don't know what the heck is in their mind. Right, right. And it's kind of becoming a real problem because the more blanks they insert in these bills, the more unintelligible it becomes, you know, at some point you don't know whether you're talking about a tax increase or a tax decrease. That's true. That's true. Yeah, it makes it hard to go in and say, I support this bill or I don't. To the extent that it might be just a new tax period and we're just waiting to find out how much of an increase it's going to be, that's problematic. But if there's a possibility that it could actually be a decrease of an existing tax, I don't know if that's at play really right now, but well then, you know, you'd want to support that no matter what the number is there, at least that we would at the grassroots. Yeah, let me give you another example. This is the current version of the green affordability plan. So what I mean by that is the governor's come in and says, you know, we need to support our Alice families. Alice being asset limited income constrained and employed. So basically lower to lower middle class. And, you know, they came in to their credit with a bill that had numbers in it. House draft one, which came out of house finance is the tax shall be blank plus blank percentage of the excess of income or $5,280 blank plus blank percent of the excess over $10,560 blank plus blank percent of the excess over $2,000 at $21,120. So each and every one of the tax brackets is replaced with a blank. So there's blanks for married filing jointly blanks for Hannah Palshold blanks for single. How do you even talk about this stuff? Well, how do they what I mean? You're over there a lot in the big square building. What is your take on why they're doing this so often? Well, number one, they know that the bill cannot be enacted in this form. Okay. So it could be a good thing? Is it a subterfuge to try to sabotage the bill? I think it's a subterfuge to prevent public comment. Well, yeah. Because what I think practically happens is, you know, they wait until the last minute to find out how much revenue impact can go into this bill. And then they fill in the numbers in conference committee at which point no public comment is allowed. You pointed out in your article that this would, if that's true, that that would violate the requirement that a bill has three public hearings. But how can a public hearing where there's no money figures involved count as a public hearing, right? Yeah, that's, I think the question that has to be asked. I mean, when we have a constitutional requirement that a bill be read throughout three times in each house. And that is at least in theory to allow for debate on the bill's contents and for the public to weigh in. Well, how can the public weigh in on a bill with a blank? Or lots of blanks. Right. 50 to 100 blanks. You know, at some point, if it's going to be like what we call the short form bills, you know, short form bills are bills that say, you know, the purpose of the bill is X. The Hoyer revised taxes are amended to conform to X purpose. It's a valid bill. Okay. But in practice, what happens with a short form bill is it gets heard and recommitted to the committee that brings it up for the purpose of inserting substantive provisions. And then the committee hears it again with the substantive provisions inside so they can have public comment. And that's what they're supposed to do, I think. And that's what they should be doing with bills that they want to put blanks in. I mean, it's really gotten out of hand in, you know, in recent years, you know, they put blanks everywhere. When you were talking about the, well, about the green-fee thing, you're saying that that, excuse me, is there a green-fee bill in there? Is that what you were talking about? Or were you talking about the green-affordability plan, which is basically changing the income tax rates? Right, right. And brackets. Right. But we don't know what the rates in the brackets are, because they're all blank. Yeah, so there's that. And then there's the insurance stabilization. And then apparently there's also, they're also doing this with HB2364, which is the conveyance tax by proposing new tiers for conveyance taxes and an entirely new classification for multifamily residential, all of which was blanked out in a later version after initially having fairly substantial tax hikes proposed, which just, again, seems fundamentally unfair. You know, this makes me think of the practice where they pass a bill that maybe they're not too happy about, or maybe they want to think about a little bit more. But they just want to pass it for whatever darn reason. And instead of saying, you know, shall be effective, you know, December 31st, whatever, of the current year, or even July 1st, they'll put 2035 or even 3,000. There's even bills going through the legislature right now that won't be effective until the year 3,000, which is really strange. What kind of tactics are these that are going on over there? Is this some kind of a way to adapt to the rulings against gut and replace? No, no, that practice has been around for a long time, too. I mean, it's basically a way, and we call that a defective effective date. It's a way to make sure the bill goes to conference. Oh, uh-huh. Okay, so look, if you're the house, you pass the bill with a defective effective date, but because you're not entirely 100% sure that you want to pass it in that form. But you want to see what the Senate does and then talk to them about it. So you pass it with a defective effective date. The Senate does their thing. And you have the chance, because they've changed it, to ticket up with them in conference. Because as we all know, if you pass a clean bill, you send it over to the Senate. The Senate thinks it's okay. And the Senate doesn't amend it. It goes straight up to the fifth floor, to the governor's office. So the house doesn't see it again. And so that, I think, is what they wanted to prevent. They wanted to take one last crack at the bill before it goes up to the fifth floor. Okay. I mean, that is, it may be a little bit problematic, but at least with a defective effective date, you can have a reasonably intelligent discussion about what else is in the bill. But with blanks in the key areas, even that is tough. Yeah, I checked in with our policy director, Amelia Hill, before we talked here today, before we joined to talk about this. And she was suggesting these blanks let the legislature take advantage of the fact that you're not supposed to make any substantial changes to a bill during conference committee hearings because, arguably, they're just compromising on the amounts. But if the bill went through both, one or both houses with a bunch of blanks, are they really just negotiating? Or are they effectively writing the bill? Yeah. No, I mean, at least with the relating to property insurance bill, the indication that I got from watching the testimony was that they're really not sure how much of a problem they're going to need. Right. And the insurance commissioner really hasn't tossed out a number. Industry really hasn't tossed out a number. And so nobody really knows what the final damage is going to be. And in that case, why are they moving the bill? So they're waiting to find out, for example, if they're going to get money from one of the relief funds, like the rainy day fund. Is that one of the problems we were talking about? Well, I don't think so. What they are trying to do in that bill is to basically create a, like a Hawaii Hurricane Relief Fund. So insurers can tap into it if they have, if they're covering a disaster. And they're going to otherwise lose a whole bunch of money as a result. I mean. Well, one thing we said about that particular bill in our testimony was that I think it involves a surcharge on the transient accommodation tax. Is that what it was? Oh, that it involves that among other things. Yeah. And that alone. And that's blank too. Pardon me. And that's blank too. Oh, yeah. That's blank too. But also, you know, they're like, according to the law, there has to be an excess between the tax and the use of the money. Right. Is that, would you consider that a fair nexus to be taxing tourism to fund an insurance stabilization program? I don't think there has to be a nexus. I mean, people make that argument, but it really doesn't have to be there. I mean, you can impose a tax for the general operations of government and shuttle the money to a general fund. And that's what we do all the time. But also wouldn't that be considered somewhat of a special fund if you were to tax a particular program and instead of sending it to the general fund, you're sending it to an insurance stabilization program. That's what they're saying, right? Yeah. I think when you are creating special funds, there are requirements in the financial statutes that we have about what constitutes a special fund or when a special fund is allowed. There you do have to have basically an argument that the fund's going to be self-sustaining and that the outflows of the fund are going to be somehow related to what you're taking in. And from where you're taking it in. And from where you're taking it in. Yes. Yes. Yeah. Well, okay. Well, that aside, we still have this issue of running bills through the legislature without money amounts. What do you think should happen in this case? What do you think the future of all this should be? Well, I mean, it took, I think a courageous couple of organizations to step up, file suit, and end the practice of gotten replaced. Yes. Uh-huh. So I, you know, congratulations go to League of Women Voters and Common Cause Hawaii for that. Mm-hmm. And maybe somebody's got to come up and, you know, step up and file suit and get this before the courts to end the, you know, the pernicious practice of blankety-blanking. Yeah. That sounds like where it has to go unless the legislature could be persuaded, I suppose, to do its own house cleaning. What do you think the chances of that would be? Uh, well, you know, you know, they come up with these interesting habits over the years. And, uh, you know, some of them are good. Some of them are not so good. Like, you know, this year they apparently got into the habit of inserting into almost every bill with money implications, a clause that exceeds the constitutional spending ceiling. Right. I noticed that. Uh, and my point about that is why do you need that? You only need that in one bill every year. And that's what they used to, you know, provide. What bill would that be? The budget bill, right? Well, it could be the budget bill. It could be something separate. I see. Well, I, are all these people saying, I know that if you add this little straw to the haystack that, or to the back of the camel's back, it's going to break the, it's going to break the camel's back. And then you pile all these on. So, so what difference does it make to say that in there, do you think? I don't think it makes any sense really. I mean, all you need is to pass one bill, and the money committees were good about passing one bill every year. That then brings up the, you know, the second question about, you know, whether our constitutional spending ceiling is being respected. And, you know. We know it's not, right? Yeah. You know, if, if legislators consider it and, and then take an informed vote, that's one thing. If, if the, you know, routinely vote to break it every year. I think it's, it's just basically taking advantage of a loophole. That's right. Well, please clarify for me. I'm not sure why, why do that? Why are they saying this in each bill? That, that this will, if this bill is passed, it will exceed the budget limit. That beats me. Because one bill doesn't do it, right? It's the, it's the combination of all the bills. And so what you really need is once every, all the bills are passed, then you have someone say, well, this total is in excess of the state spending limit. And that's what we're looking to do. We're looking to all vote on whether that's good or bad, or somebody goes through and line items out things. I don't understand how that, what they... Yeah. That, that makes a lot more sense. That's not how we, that's not how we do things here in Hawaii. Well, I'm looking forward to having some groups step up on this too. Unless somebody can propose a constitutional amendment. Somebody would have the gall, the gall, or the courage to submit a constitutional amendment. But similarly. That would, we should, we're talking about, we're talking about the blankety blanks, right? That's what we're talking about again. If somebody would step up and propose that this is not acceptable, this is just totally, for example, we, the Graduate Institute of Hawaii on this, I think it was the insurance stabilization fund. We just submitted a testimony yesterday. I think they're having a hearing today on that bill that, you know, the first time this went through, I think we commented on it that we didn't support it because it had, it was more taxes, you know, basically. And there's other ways of dealing with it. And now the second round is like, well, geez, now we really don't support it because we don't even know what you're talking about anymore. You know, at the very least put the language back in so that we can figure out what you're talking about. You just can't throw out a bill the assumption has to be that you're going to raise taxes. And, you know, it'd be really nice to know by how much and maybe that could cool the gist of some people that might be opposed to it, but... Yeah, I mean, that's, I think a key, a very key point right there. Even if you have a bills that you know is a tax increase, you got to know by how much. Some people will say, well, it's probably okay if it's under a certain amount. But if it's 100%, 200%, then people are going to go, who, who, you know? Right, right, right. Are there any legislators that you're aware of that find this practice weird or reprehensible even? Who are the reformers that we could talk to at the legislature about something like this? Well, I'm not sure that the reformers would be able to do something given that leadership is, and by leadership I'm talking the powerful committees are the ones putting these blanks in. Yeah, let's see. Which committees are we here talking? Oh, do you think it was the committee that's hearing these today that did that? Or like this is Committee on Ways and Means and Senate Committee on Judiciary now. Was it, do you think it was people in those committees that did that? Or was it the committee that heard them previously? Well, in House Bill 204, the committee that put, you know, a jillion blanks in the bill is House Finance. Oh, huh. And I'm not trying to single out any committee in particular because it's a widespread practice on both sides of the aisle. It's become ingrained. So what do you do about something like that? That's a problem. At the grassroots, we have, you know, our paying attention as closely as you have been for so long is more of a recent phenomena. We've really ramped up our paying attention to what's going on at the legislature only in the last few years in terms of specific bills and submitting lots of testimony. And so I had never noticed that prior. And I bet money that most people have no idea that this is going on all the time too. So this has been real educational for me to see it and it certainly strikes. I wonder if the 1,000 friends and the League of Women Voters know that this is going on. You know, this might be their next, maybe this should be their next, and maybe what kind of awards could we, you remember the rusty bucket or the rusty scalpel board? Yeah, maybe what would be the equivalent here? The missing calculator award. The incomplete award. Oh yes, that's right. That was the title of the episode. Even the title of your column was Fear of the Unknown, which, you know, makes it all kind of spooky, but the title of the episode on the screen was the incomplete legislative bills. Yeah, there you go. So moving forward, what do we do about, what do we say when we go to testify on these bills? We, in our case, we said, basically, please put the language back in. We can't really talk about it. We had a headline on one of our testimonies that said we can't comment on this anymore. We don't know what the numbers are. What do you- Legislative committees in the public ask all the time, you know, what's the revenue impact of the bill, right? Right. And you can't give one if the numbers are not there. Did you submit testimony on this bill, Tom? Yes, we did. And what did you say? Pardon me for not knowing, pardon me for not having it at hand, but what did you say? No, we talked about that the brackets, the income tax brackets in current law, many of them have been in place since the 60s and inflation has done a lot since then. And now the tax brackets at the low end are, you know, what, you've got two or three different tax brackets for income under $10,000? I mean, it's meaningless. When money used to mean something. Yeah, I mean, today, those brackets are meaningless. So why have them in the code? I mean, it just makes life more complicated for everybody. But they didn't take them out of the code. And they've added more brackets or something, right? Yeah, so now we have like 12 or 13 total, which is I think one of the most complex in the country. Yeah, I think it will be if that happens. Well, it looks like the legislature needs to be revamped a little bit in what they do if they want to be fair to the public, in terms of being able to comment on legislation that might be affecting their lives. Any last word, Tom, we've got 15 seconds. Blankety blank. That's right. Well, thank you very much, Tom. Good talking with you again. Thank you very much, everybody, for tuning in. I hope that you learned something and maybe you can do something about it because it sounds like something that needs to be fixed. To everybody out there, thank you very much again. 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