 This is Think Tech and this is Talking Tax with Tom here on a given Thursday morning And we have Tom and another unidentified guest I hope you'll take a moment to introduce your unidentified guest Tom Yeah, for those of you who have been fans of our Weekly commentary every once in a while one it gets written by the Hawaii State Tax Watch Doggy and here he is So watch what except he has glasses on the pictures, but He forgot his glasses this morning Yeah, but you can see that he's watching and he's definitely a watchdog So our subject this morning is the same as an article that you wrote a few days ago for civil beat It's a it's how we're gonna spend the cares act money The largest chunk of money 560 million went to county government sort of talk about that They also talk about the balance of the 1.25 billion So, you know, how comfortable are you with the way they did it? Well, I'm a lot less comfortable now because They the legislature did pass a plan to deploy all that money But then it went to the governor's desk and we've had some line-out of vetoes and One can I mean This money is a little different It didn't just come to the check To the state in the form of a check for hey, here's here's one point two five billion dollars The the idea is you have to have expenses They have to be incurred before your end and they have to be related to the COVID the COVID pandemic So they the the feds will reimburse expenses And then and if you have anything left over it goes by by So And let me go through like some of the items that that we had budgeted for and that went through the The governor's veto plan Oh, we we start off with unemployment assistance Well, we had talked I think last time and and the line a lot of vetoes Happened just after last week's a last show, which was two weeks ago. I think the very next day So it was just kind of we missed it by one day day But you may remember the The feds had been giving a six hundred dollar a week Boost to unemployment benefits. We sometimes called that the plus up well that ended on July 31st and The idea was for the state to give a $100 plus up You know and we can't we can't print money like the feds can so we were just trying to Give the people who were out on unemployment a little bit more to live on But inexplicably the governor basically Took the 230 million dollar appropriation that was supposed to go to do this and he reduced it to zero zero So and now the reasons for it In the governor's veto message were well, okay Right at this moment and this was two weeks ago there were negotiations afoot in the US Capitol to see if we could extend the program and Under one possible situation there would be more than three hundred dollars and need to act now It's what I'm going to do is I'm going to veto the appropriation And I'm thinking because there was so already something in the appropriation that said if the feds kick in more than three hundred bucks The state plus that goes away But now instead of six hundred instead of three hundred they get nothing Somebody wasn't reading That's what it sounds like I mean, it's it sounds it sounds like there's there's a very questionable logic going on Um, all right, I don't know if you're called even call that logic at all But I mean it seems to me that if if somebody else were the governor and they got concerned about The feds kicking in enough money to to make our program Wasteful but then the governor would come in this restrict restrict the spending at that point you can do that You know, he's he's restricted government government spending before Yeah, he's he's imposed like You know 5% or 10% cuts across the board Basically saying yeah, you let us nature gave you some money, but don't spend it because I wouldn't allow you to So what's the net effect here? I take it a veto at this point can't be reversed Practically speaking no I mean the the legislature would basically have to have to call a special session And go in for a veto over right though. I mean, I think technically they can do that But practically speaking it's It's infeasible. Well, there's another point in your article and we should go into it later Which does seem to call for a special session, but let's get to that later Let's let's talk about the net effect of this line item veto on the plus up Well, the line item veto it basically says there is no plus it ain't happening Right. So what do people get? nothing Okay, now, how does that change? I by Trump's proclamation, which is a questionable legality. I Don't think it changes at all The state is the one that primarily provides the unemployment benefits and it's from funds that were collected from the employers So we have put all of this money into an unemployment trust fund and then that is what is being spent To give people unemployment benefits. Now for some employers Look at the nonprofits for example, they're considered self-insured so But but still that the state provides the benefits in the first instance and then collects reimbursement from the employers so In any event, you know, the feds are not involved So there is no unemployment insurance. Does that mean there's no unemployment benefits for anyone going forward? No, it's just without the plus up. So you get your you get your unemployment benefits Well, you know, whatever the law provides, I think it's 70% of your salary At the time you're unemployed, okay, there's there's no kicker, you know Honestly, let me digress for a moment. The whole system seems so Unnecessarily complex and I keep thinking Excuse me. I think I keep thinking of Andrew Yang Where he his view of it was just give everybody thousand dollars a month And that's for compensation not unemployment insurance, but just give everybody a thousand dollars a month and You know, we'll we'll find the money for it and it won't depend on whether you have a job at the time It won't depend on, you know crises like covid. You just get the money Same thing with health insurance and it does suggest that You know the linking health insurance to a job When the economy is in the tank and there are a lot of people out of work permanently It just seems doesn't it it does suggest that we ought to have these benefits without reference to a job You may or may not agree with that, but it does suggest that our system is is not not functioning well Well, I think the way our system is designed right now There are incentives to get back to work If you are for example collecting unemployment now, you're required to You know put your name in the database saying you're looking for work You're required to make some calls on prospective employers and you're required to report this to the Department of Labor. I think every week And if you and if you if you're not a good boy, they won't give you a next check until you until you Um get with the program. Yeah Well, if you've ever talked to anybody who applied for unemployment compensation or why they'll tell you horrible stories about the bureaucracy And how it doesn't work the way it's intended I totally agree that there should be some incentive to get you back to work Um, but it doesn't have to be all or nothing And this is I think this is what we're learning here in the time of covid But back to the main trail Um, what what else what else was part of that 1.25 billion and what happened to it? Sure, uh There was a housing relief and resiliency program rental assistance that we talked about This was going to be administered by hhf dc Which is the hoy housing finance and development corporation They weren't going to do it themselves But uh, the plan was for them to contract with a nonprofit intermediary to establish a centralized database of some kind and work with nonprofit agencies Uh to distribute funds and provide other assistance to qualified households and qualified households would be um renters and homeowners impacted by covid 19 in some way, uh, that are not earning more than 100 of every meeting AMI area meeting income The idea was to give them, uh, you know subsidy amounting to 50 percent of rent up to 500 a month Uh for five months from august to to december um, so the uh appropriation that was set up for this was 100 million dollars The governor scaled it back to 50 Um and and his reason His reason was oh, uh, the department said 50 million would be okay to start To start You mean to start No, a query out doesn't really sound like that's enough to make a difference for a lot of people And that uh, it's not going to prevent uh people going out on the street for the lack of funds to pay rent It really it sounds pretty cheap to me well, I mean uh 100 million dollars in theory could go a long way. Um Just really a question of how many um You know recipients are we talking about? uh, and uh, I don't have the figures in front of me, but yeah, I mean Or how many people do we think need this type of assistance? um And and why is this being scaled back so much? That's a pretty serious scale back Why did it start at 100 and go to 50 and you know, I mean that's a pretty big difference If you assume that the uh unemployment compensation is not working too well Then people don't have anything from that fund in order to pay the Rent and uh, remember two the rents in Hawaii are a little too expensive The cost of occupancy is too high here So it's a major factor in a lot of household budgets Right. Yeah, so this is uh, I'm greatly concerning um the um The legislature also had appropriated 15 million dollars for Ppe supply chain grants and this is to support local companies creating supply chain for cleaning supplies disinfectants and other personal protective equipment For example, distilleries that convert to sanitizer production Uh for which uh, yes, there are other federal tax exemptions also available but What the what the state was budgeting for was grants Up to $500,000 per recipient Uh through the Hawaii Technology Development Corporation HT HTT C Uh 15 million was appropriated for this governor slashed it to 10 uh same reason reasoning process as for the housing program The department said yeah, we'll need 10 million to start and then The governor says find you get 10 million Sound like he was really being you know cheap But the problem is you've got to spend it all or you'll lose it. So why was he? Uh, I guess he he had priorities where he was going to spend the rest and he was sure He could spend the rest on qualified expenses So he wouldn't lose it because it has to go back if not spent by december um What happened on the net effect there? Um, did he spend it all? Uh, we don't know There's there's plenty of time between now and the end of the year to spend that money Okay Well, what are the issues? That's something he can legally do it Yeah, one of the issues you raised in your article was that some of the money that was being spent Yeah, the slush fund 40 million slush fund appropriated to the governor's office Uh supposed to take care of unanticipated needs Right. He didn't he didn't reduce that one. He he kept the 40 million dollars intact the one going to his office That's right. Weary is that didn't touch that one. Yeah, that's interesting I guess he he must have had some anticipation of the unanticipated expenses Okay, and so there's other things too and the I guess the question is what What happens if he I think I know the answer What happens if he doesn't spend this he doesn't spend to see he has to what give it back Sometimes it's not so easy to spend money and and it's not so easy to spend money in a governmental setting virtually overnight How does that how does that work if he vetoed line items? He cannot unvito them Can he take the balance and find somewhere Qualified to put it so he doesn't lose it Um, I think in theory it's possible. I I'm not really sure how I mean you're not supposed to uh Yeah, as as the executive here. I don't think you have the authorities to overspend your budget because then you Are are basically ignoring the legislature and what they what they said So there must be some constitutional problem with that and um Uh, and I think you know the more appropriated unappropriated monies you have The harder it is going to it is going to be to spend What you need to legally by the end of the year because that's what's got that's what's got to happen You got to spend it legally by the end of the year And according to the the treasury's most most recent guidance in june 30th guidance They they uh, they said it's not enough to you know for the money to be set aside Uh and waiting in some kind of fund You you have to have a service contracted for and delivered by the end of the year Perform by the end of the year or you need to have a product that is delivered by the end of the year Okay, you know if you if you do that then and you pay them a little bit late. That's okay um But you have to have the performance of the vendor taking place by the end of the year Well, you know, it sounds a little bit uh questionable that about the the airport So the bill uh the appropriation is bill gave 90 million dollars to the airport and Yeah, they go down to 70 million. They took it down to 70 million And i'm not sure i'd like your your thoughts about this was supposed to augment airport screening and health assurance security Initiative sounds like gobbledygook to me Well, what what what they wanted to do was buy a thermal screening system which they've done um They want uh, they wanted a web based traveler verification application which to me is sounds questionable And they wanted to renovate some rooms to have you know in some interrogation rooms They didn't put it put it in those terms Uh, they wanted a swab and testing facility So you can basically deal with travelers and uh, and if they're and if they're you know, if they're positive if they're sick You send them back That that's what they wanted to do Uh, the question then becomes okay if what you want to do is do some renovations at the airport You got to go through this permitting stuff um Unless unless they think they can bypass that uh I mean usually you have to you have to um Get plans drawn up. You need to uh have permits Obtained and then then you can start construction Uh, can they do all this by the end of the year? I don't know No, it sounds like it's um theoretical. It's not even divided up Between one thing and another, you know, how much for the rooms? How much for the software? Um, how much for the machines? We don't know somebody has to decide that so all it really is is an allocation to the airport's division Right. I think it's a big question about that The other thing, um, maybe you know more about this than I do but uh, You know, somebody told me recently they flew in from the mainland and um Aside from this theoretical thing about quarantining the airport really had no system to stop them Uh, they walked off the plane and Took a cab and there was there was really um nothing to block them no interrogation rooms And apparently the law does not really allow for that So are they anticipating? That there will be a change in the law. They haven't made a change in the law Maybe they're anticipating maybe the governor is anticipating that he's going to change the system at the airport But the fact is you can walk off a plane right now And then you're on your honor Well, uh, not not not entirely. I mean the way that the thermal screening system is supposed to work is um I'm talking about the interrogation rooms time thermal is easy You know, I priced out those those thermometers Um, they cost 60 bucks a piece on amazon You you could you know, you could outfit the whole airport for What, you know a thousand dollars the whole airport Well They want they want to be more sophisticated than that. I'm sure okay Uh, but but I think the idea is you know, there's some kind of Uh, uh TV camera or Sensor that takes a picture of a you know entire corridor of arriving people And uh, you know, whoever's face gets lit lit up Then you know, somebody kind of jumps into the crowd and pulls them out and says, okay We need to screen you a little bit further And everybody else just kind of Why does that not persuade me? I mean haven't we been reading, uh, you know for the past I don't know a couple months that the people there are many many people who are asymptomatic But who shed virus all over the place And those uh, you know taking temperature thermal screening doesn't cover them They could be walking off that plane and shedding virus in every direction and infecting everybody And and we would not know it from their temperature Yeah, well, I mean that's that's just one way to catch them What other plans they have? I don't know. I mean they haven't talked about that Yeah, well, let's talk about the money that went to the state. What was in your article 560 million? I'm a little confused by that because I didn't trump say that he didn't want to support the uh, the counties And and here or rather any subdivision within the state and here we're doing that. Is this okay? Or is this objectionable in some way? uh According to the guidance I looked at under the under the care that that's perfectly fine um, the guidance was put up by treasury uh, so unless Unless trump shakes down manukin and Say something very different You know, we're still getting that money or at least we're eligible unless Unless we don't spend it Well, yeah, so so they give it you give uh, what was it? I found three hundred and 87 million to To say oahu Yeah, and so so all right It's not getting spent. It's simply going to one county. Is that spending it? Or is that is that subject to refund? I'm not entirely sure how that works um I think I think the refund the Rules for counties are a little maybe a little different from states, but I'm not entirely sure Okay. Well, I don't you know, uh, we had a survey recently and a lot of people responded to the survey it's not over yet, but um To say that they really did not have a high level confidence in state government About it the way the state government is handled cove that that's that's my opinion. That's that's uh, the people who responded to our think tech survey And I'm troubled that this is this is part of it. The other part of it, of course Is the the failure of testing and tracing here And I noticed there was nothing directly attributable to testing and tracing. Am I right about this? That's a 1.25. It did not did did anything go to testing and tracing No, I think that's that's from another part of the cares act um So so I think there's there was a separate pot of money that went to the department of health Anyway, it goes to the question of whether you're confident about how the state is doing I mean, there are people who are calling for the resignation of public health officials Because they have failed to develop a testing program and a tracing program well, I mean, it's it's it's really tough because uh, you know, even even the senators who were uh, tasked with You know overseeing some kovat response They they went to a to the department of health on a surprise visit uh, and they found And they talked to the people who are actually doing this and And they found oh, we only have 10 people or 15 people Are you kidding me and each each one has like, you know hundreds of cases Well, they were supposed to have they were supposed to have something over 400 And uh, I mean surely there's a lot of people out of work who'd like to have those jobs Not rocket science. You just follow a list of instructions And a list of a a scenario A script on the computer and you talk to people on the phone with the script That's tracing and you enter information in fields on a program It's not complicated. They could find people but they didn't find anybody But they they said they have like 400 people trained and they have 100 people deployed, but where are they? Uh, the the senators found 15 Um, and maybe a few on the neighbor islands, maybe another five Um, so what we got 20 people, you know, where's the other eight that we're supposed to have? It's quite remarkable because our our uh, we're known Nationally as a big hot spot We've done bad. I think I heard somebody say we've done worse than any other state in terms of the You know, uh geometric progression of our caseload And um, we're having 200 cases plus per day in a population as small as Hawaii. That's quite remarkable You'd think that the health department would be working 24 by 7 to trace everything But apparently we're not doing that Yeah so this you know, I guess I guess this this leads to the question of uh, it's a qualitative question, but Have have we done have the state has the state done a good job with this 1.25 billion? Or are we thrashing around with it? You know to me there is a very serious question about whether we're going to be able to spend that money by year and um People who think that it'll be easy piece of cake You know, I think they're fooling themselves um We need to have plans in place now We need to have you know, we need to be in the execution stage right now. We need to Uh be helping these people Not not not sitting around trying to figure out, you know Oh, you know, we the feds might do something later. So let's wait until later It ain't gonna happen We don't have time for this Yeah, well will will trumps proclamation help to any significant degree? I mean putting aside the fact that a lot of people a lot of people think that it's illegal anyway Yeah, I don't think I don't see, you know trumps executive orders and memos and so forth um Are really going to help a whole lot and uh You know, it definitely won't do the same A degree of good as a deal in congress Um What we need is a deal to happen and we need to have them now Yeah Well, I I I hadn't seen it but um yesterday the star advertiser had a program involving josh screen Which is actually available today on the star advertiser and I will look at it later people said that he was Very articulate and his points were well taken and so what you know, what we get is um, maybe um um a diversion Between what the governor is saying bruce anderson sarah park on that side and josh green on this side uh, we I hate has to use the word divisiveness, but I think that pretty much what it is They don't agree. They're not doing the same thing. They're not saying the same things Um, this of course leads to a lack of public confidence your thoughts Yeah, no, I agree with that and and uh, our congressional delegation has been getting in the mix too Um, you know, uh shots has come out and said said Uncontrollable entry things Tulsi gabbert has Has has basically called for the resignation of the top people in department of health um It looks like we're in so much disarray right now. I can I can't blame the public for For having no confidence No, and you know a serious issue is uh Um that for the what the rest of August is it maybe Till september sometime Congress is not going to do anything They're They're out of they're out of session On vacation. I'm not sure what it is mostly the senate as usual But they're not going to be able to do legislation. They couldn't before They fit it around for you know a month or more I never came to any agreement The democrats in the house had a program Set up with three trillion more dollars in may But that never had never got any traction in the senate And that left the vacuum for trump and he filled it badly The result is that we're not going to see any more real money Uh from the federal government For at least a month at least a month How do you feel about that? well, I mean it's Like anything else, you know, you can't really depend on government And I really have to look out for yourself Um and your family And I hope all of us can do that Okay, well, let's uh nevertheless, let's meet in a couple of weeks time and take stock About what has happened here and what could happen. It is and will happen I don't you know at this point As Jean-Paul Sartre used to say there's just no faith Um, it's been spent or not I don't think there's a whole lot of discretion left between now and december. We'll see And maybe we'll know more in the next time we meet. Thank you, Tom. Tom Yamachika Thanks foundation of why thanks for joining us. Thanks for having me on the show