 Yeah, welcome back to Think Tech. It's a given Thursday morning and I'm here as usual with Tom Yamachika talking tax with Tom and we're going to talk today about overtime. That's a threatening word over time. You know, overtime usually suggests something something that needs attention or else. Tom, what do you mean by that? The title of this is the 2021 legislature is going into overtime. Okay, we have just received word, I think it was yesterday, from Scott Saiki's office that the legislature is being called back into session on July, what is it, the sixth next week Monday? Mm-hmm, but it's the day. Yep, and what that means is that they are kind of gearing up to consider some of the vetoes that were on the intent to veto list that was released last week and had a rather large number of bills in them, 28 bills. So they are going to use that session to consider either changes to bills that have been vetoed by the governor or if they don't like the veto decision at all, they can vote to override it by a two-thirds majority in both houses and the bill- So this is essentially a special session. It is a special session, yes. So the question is, is this the ordinary way it works? They see some bills on the veto list, they are committed to, if you will, they don't want to see them vetoed. So they organize a special session even before we actually vetoes. Well, that's what the constitution of our state says that they have to do. In article three, section 16 of our constitution, it basically talks about what happens if there's a veto after a German of the literature. And what it says is that the governor has until the 45th business day following the a German of session to sign or veto any bill. That would be July 6th. 10 days before that, the constitution says that the governor must give notice of bills that may be vetoed. So 10 working days before that, and that was I think June 28th or whatever that day was that intent to veto a list came out, okay? And further it says that the legislature may return in special session without call for the sole purpose of acting upon any such bill returned by the governor, which means to amend things or perhaps override. And the constitution says that this special session must be called before noon on the 45th day. So July 6th is the 45th day. So they have to convene before noon on that day, which is what they're doing. Okay, and how long will the special session last? Well, we don't know. What happens in special session is that the legislature has a chance to act on vetoed bills. Now, the vetoes can be either total or line item in the case of budget bills. And the speaker's office said that they do have to take some action to fix some things in some of the budget bills to conform with federal requirements, for example, because they're relying a lot on federal aid to balance the state budget for this year, given the fact that the pandemic kind of shot holes in our economy. So we have to fix that somehow. We fixed that using federal aid, the massive American Rescue Plan Act package, but we have to conform with the federal requirements because those federal dollars don't come without strings. Well, to the bills that were passed, were they in conformance? Well, the governor doesn't think so. And for that reason, he's between a few of them. One of them, for example, is the bill that would have given $2,200 per teacher. And the governor's intent to veto message said that there were some concerns with the meeting federal requirements in that one. I don't know if the legislature would necessarily agree with his comments, but if there's a veto, then the legislature will have a chance to fix it or override the veto, one at one. One hand, generally, is this package of vetoes consistent with previous packages of vetoes? In other words, are there more vetoes here than before or is this consistent pretty much within the historical nature of this process? More than typical. 28 is a big number. I think it was maybe a bit more than that in the lingual administration, but there you had the added dynamic of the governor being Republican while the legislature is Democratic. So there were apt to be a whole bunch of ideology changes and the ideology clashes and there were. So a lot of the vetoes in Governor Lingl's administration did get overwritten. Well, there's this 28 number reflected a certain underlying clash, maybe not ideological, but nevertheless a clash between the executive and the legislative. Well, not necessarily, the way the governor put it is, well, they passed all of these bills in May with the understanding that we were maybe gonna get some federal money, we're not really sure how much and we weren't really sure about how the economy was gonna rebound at that point. And then by the time it got to the end of June, the governor said, well, the economy's rebounded and we've got a whole lot, we're in a lot better shape economically than we were in May. So he said, we don't have to deal with some of those extreme revenue-raising measures that were passed in May, such as the Enola Gay-Frankin bill which we had been talking about earlier, or the bill that would give counties the ability to levy their own transient accommodations tax while at the same time, shutting off the pipeline of TAT monies that's already going to them. Yeah, we talked about that last time. But okay, so let's go through some of this. It sounds like there's a number of them that are based on the fact that our economy looks better than it looked before. Although that may be ephemeral time, we do have the variant going left and right. There was an article in the Times today for the proposition that there are hotspots around the world now that are having extraordinary increases in COVID based on the variant. And some people think there's no exemptions anywhere including Hawaii for that. So we may find ourselves in a situation that is not as rosy as he thought. Well, I mean, the economic numbers are what they are. The Council on Revenue has, I think, met a couple of times since then. And they are the ones that are giving us the rosy picture. They are necessarily predictions, but they're probably better than any partisan politics could have come up with. Sure. On the other hand, if the people who are concerned about this are right in terms of prediction and we operate on a relatively rosy analysis, rosy data, if you will, what happens say in the month of September, October, if we find that it's not so rosy? Well, predictions get revised. And that's what happens. I mean, it happens all the time. And we have to act accordingly. Well, you get the Council on Revenues, they could revise, but what about the legislature? Could it revise in between sessions? Yeah, that's what we usually do. We budget on a fiscal biennium, which means a two-year session of the latest lecture. And initially, in the first year of a two-year session, we put in a budget for both years. And on the second year, we do a supplemental budget request that is just basically for the second year in the biennium. So- Yeah, but I'm thinking sooner than that. I'm thinking that right now, these vetoes are, at least in part, are based on the Council on Revenues, which has recognized that we have a reopening going on, the economy looks better than we thought it would look. But if the variant becomes a greater problem, say in the fall, how do we deal with the budget then? Or does it just have to suffer through till next year? Well, the governor does have the inherent power to not spend the money he's appropriated. That's called restricting money. That has been done in commonplace fashion pretty much in every year. When the pandemic was first announced, for example, the governor announced, I think it was a 10% across the board restriction, which means that an agency that was appropriated, $10 million could only spend $9 million. Okay, and of course, he always has the power to issue emergency proclamations as you and I have discussed on a number of occasions. Yes, and he's been doing so repeatedly. I think we're on the 20th one now. I would assume they're less emergent now, though. Well, there's still emergency proclamations and they still restrict pretty much the same things as they did before when it comes to taxation and open records and stuff like that. This is all kind of slightly chaotic. Anyway, let's go back to the bills themselves. So we know there are some that need to be changed to conform with federal requirements or at least settle out what is an applicable federal requirement in the context of these bills. What else? Well, like in the case of House Bill 200, for example, which is our budget bill, the governor has indicated that he would line items, some items there to be consistent with federal requirements. So let me explain what options the legislature has. The legislature can amend a bill that has been vetoed and only one reading is required in each house for passage of the amended version, okay. What's a reading term? That's not a committee hearing, is it? No, it's basically a floor session. Okay, so somebody reads the bill or maybe hypothetically reads the bill and then they vote on it. Right, so the legislature is where they consider themselves bound by a 48-hour rule, which means that the final form of the bill needs to be made available to legislators before they can vote on it. So they might have hearings, they might not. They may just kind of convene on the floor, put in a floor amendment, which is what they do sometimes. And then they vote on it and then what then happens is if it's an amended bill, if there's a bill that's amended to meet the governor's veto, then it goes back to the governor and he has 10 days to sign it. If he doesn't, it doesn't become law. So he doesn't have to veto it twice. Good, okay. Well, that would be redundant. He's already expressed himself. But I suppose they could try to fix it and still if he does nothing, it's essentially a continuation of the early veto. Yeah, and the other thing they could do is they could override the veto where the two thirds vote in both houses, the bill will become law anyway. But let me ask you this. I think I already know the answer. Suppose they try to amend it to deal with his original veto and they send it to him as amended, thinking, oh, this is gonna work because we addressed the concerns he expressed when he vetoed it and then he doesn't do anything. And now his earlier veto sticks. Can the legislature then override that veto in a second step? Not as I read this constitutional provision, but as I was next year. Thank you for that. Okay, anyway, so let's talk more about what we're doing. Yeah, we can't view legislation as a closed-end process. It goes from year to year. Absolutely. Okay, so we were talking about the bills that need to be, the he-fields need to be vetoed to conform with federal requirements. Is that a substantial number in the 28? I think so. I mean, at least half a dozen seem to have that in their veto messages. You know, another interesting thing that had come up was in a number of the veto messages, the governor expressed some concern that there was some log rolling going on. And what I mean by that is that the bill as discussed in the public and has presented in public hearings, they talk about that, but then what they pass is something entirely different. Okay, and the transit accommodations tax bill was supposedly in that camp, according to some people, Senate Bill 58, I'm sorry, House Bill 58, what used to be Senate Bill 56, the Anology Frankenbill certainly falls into that camp. So, but to hear a governor say that, gee, I'm concerned about transparency, I mean, it's almost hypocritical because this is the dude that basically deep sixed our transparency laws at the beginning of the pandemic. You know, with a stroke of his pen, he said, you know, the Open Beating Law is null and void and the Public Records Law, the Uniform Information Practices Act is null and void. And that's how it was for a couple of months. Well, of course, that's government, if you will. But what about politics? In other words, you can have a veto message that really doesn't ring true, at least not to a rational analysis that is just not acceptable from a rational point of view. And then you have to look behind that veto message and see if there's politics going on, lobbying, special interest groups, what have you, campaign contributions, if you like. Yeah, I think that's the... I think that is one of the primary considerations driving that teacher's bonus bill, okay? You know, the governor says in his veto message that it has to meet federal requirements. But you know, I think the real reason is that the bill gives a bonus to HSTA without the benefit of collecting bargaining agreement. HGEA is jumping up and down because their members didn't get anything. So I think that conflict has a lot to do with what's happening on that bill. So if you have a situation like that where there seems to be a special interest persuasion in the original veto list in the veto or the prospective veto, I suppose that people on the other side of that question are gonna make trips to the governor's office and try to lobby him the other way. I guess that's happening with any kind of bill that smacks of self-interest lobbying, you know? Well, I think that applies to all of the bills. If you have people interested in them, they're gonna try to lobby. And because we're going into overtime, there are lots of people that need to be lobbied, not only the governor, but the legislators are in play again. Sure. Because we've got special session going on. Sure. I don't know, maybe I'm... Mr. Smith goes to Washington kind of fellow, but it seems like from what you say, everything is subject to lobbying and special interests. And there are very few bills, and we saw this in Washington, in a really, in a reveal over the past four years. And there are very few bills that are actually altruistic, clearly indisputably for the public good where no one takes a self-interest position on it. Am I right? I mean, that's a philosophical question, but am I right? Well, you know, the law is supposed to be the science of what's right versus what's wrong and how our government works. So, I mean, in theory, you might be right, but I think there's always somebody who stands to profit or lose from any bill. Okay, well, once you talk about some of the others now, I know you've analyzed quite a few of the 28. Well, we have quite a few that are on our list because they deal with taxation of public finance. You know, that one with the teacher's bonus is one of them, as I mentioned. And, you know, I can't help but wonder what's, you know, what would happen if the legislature does something like totally unexpected? Like, they can say, okay, we'll fix this problem by giving the principles a bonus of 2,200 also. And then, there's nothing unconstitutional about that. Right? I mean, yes, you've given the teacher some money that didn't come from the collective bargaining room, but if you give it to the HGEA members too, at least there's some measure of parity. It sets a horrible precedent, but is that a possibility, as it is? Yeah, well, that's sort of like infrastructure. I'll vote for infrastructure, call it, you know, bilateral or something because you're building something in my district and you've bought me off is what happens. Yeah, it's the I scratch your back, you scratch mine kind of thing. Yeah, that's too bad. I don't see that as altruistic or necessarily for the common good. Okay, what about suspending GET exemptions? What about that? You know, on that one, I think the main point of contention, at least from the governor's veto message was that the, not, it wasn't the GE tax. I mean, people weren't really talking about it. They were talking about conveyance tax and that affordable housing, which is usually bought and sold in bulk, right? Because the, and affordable housing developments usually an apartment complex or some large building with multiple dwelling units. The conveyance tax on residential buildings you know, is going to be between triple and quintuple. So you'll have like very significant conveyance tax imposed if the bill passes as it now reads. And the governor's big problem was, well, you know, heck, affordable housing is a big priority of ours. And this really, you know, really throws a kink into it. I would agree with that, wouldn't you? I would. And the way commercial buildings are being defined you know, through reference to the you know, the county real property classifications. It also shows that if you buy or sell a large farm, okay, the higher conveyance tax rates are going to apply. Why? Because a farm isn't residential, but it's also not commercial. It's, there's a classification called agriculture. And if you're, and what the law now says is, in order to be in that commercial classification where the tax hasn't gone up, okay, you have to be zone commercial, you have to be classified as commercial under real property tax, which usually means zone commercial. No, you know, honestly, in the days of our crisis over COVID and let me add climate change, you know, actually this all seems like relatively small potatoes. I mean, we're tuning up things or maybe not as if there were no crises going on. There are two main crises, major crises. You know, to make the place sustainable and resilient against climate change and to make it hardened against the other possible pandemics. These are complex issues and, you know, they deserve the attention of the legislature. But if I had to characterize this session, I would say let's just not really dealing with the hard questions. I mean, for example, another one is homelessness. I mean, keep the society alive to avoid having everybody leave, to avoid going into backwater, to build other industrial sectors, for example. I don't really hear anything going on about that. And I suggest to you that we're not dealing with the larger questions. None of these vetoes deal with larger questions. And it seems to me, you're gonna know more, but it seems to me that we don't have bills that deal with the larger questions. What's missing? Well, I think what's missing is a unified way of thinking about the issue. If you can't have any coalescing of the thinking around the issue, you're not gonna have a bill. And even if you have a bill, it's not gonna pass if there are too many divergent approaches. And getting a lot of people behind a particular idea is called leadership. We need more of that. I mean, we need somebody to propose a good idea and have the resources to do it that everybody gets behind and then we deal with it that way. When you have a ton of different people with a ton of different ideas, lots of things get proposed, but they all drop by the wayside as nobody coalesces around. Yeah, exactly. I totally agree. And it also goes back to the issue of self-interest. The recent people go down in the lobby is their own self-interest, their business interest, their interest as consumers or homeowners of what have you. And we have a lot of that. We have a lot of self-interest operating. I guess that's the part of the tumultuousness that D'Tochville gave us on understanding democracy. But the problem is you also have to have the altruists. You have to have the people with the vision. You have to have the people who want to come together on larger issues and saving humanity, saving the planet, saving Hawaii. And I'm afraid that the group that is lobbying for self-interest is a larger, far larger group than the people who are lobbying for those visionary measures. Well, I mean, and there are other considerations too, like take your typical legislator who has a constituency. If you talk to those people in the district, they're not gonna worry so much about whether this island's gonna be here in 500 years or what, if they're worried about how to put food on the table or how to shelter from the elements this week. There's a priority scheme that's going on. And there are a lot of unmet needs that the population has right now. Yeah, true, that's true. But if you measure priorities in terms of the future of the species as against what's happening this week, somebody has to stand up and say, well, I think we should care about the future of the species. And I guess you're talking about leadership now, but one, my last question for you, Tom, is let's assume we have a leader who is interested in these larger issues. And I know has the capacity, capability to evoke thinking and commitment to those larger issues. How does that work? How does it work in terms of Hawaii? How does that work in terms of the social dynamic of raising issues and advocating for issues, getting interest groups to pay attention to them, getting the legislature to pay attention to them? How are we gonna do this if we do it right? Well, I think if we do it right, we need to realize that each person has a hierarchy of needs. Okay. And there is, I think, a minimal point that has to be met before you can even start talking about the broader issues. I mean, if I'm homeless today, I'm gonna need shelter today. I don't really have time to think about or argue about what's gonna happen 500 years from now. How about 50 years from now? But once you have basic needs of the population that are met in a collective sense, then at least people will start to think about it. And then you can maybe have a chance of getting some, you know, ideas going in and wisdom coalescing around one, two or a few ideas. Some people in the legislature are trying that. I hear that in some of the committees like Water and Land and EEP all the time. But again, the big problems are resource constraints. Do we have enough money to do this? And two, do we have the time to do this given what's on everybody else's plate and what the needs of the population are? Bottom line is we don't do it. We always find a distraction always. Our priorities never include this. As a result, you know, we've been talking about a climate change since Al Gore. And we haven't really done anything. We haven't spent any money on it. And there's always something that gets in the way and distracts us always. So if the process continues the way it's been going, we won't do anything. And that's regrettable because at the end our progeny will suffer. That's my thought. Yeah, well, and if you don't tend to the other stuff, you don't have to wait for the progeny to suffer. We'll suffer in real time. Okay, it's all about leadership, I think. And a leader, just as you say, could change the way this works. That's not happening right now. Maybe next time around. Maybe next time around. Yeah, well, thank you, Tom. I always enjoy these discussions. We always find nuggets of wisdom work, nuggets of important issues in what you say. And I really appreciate that. Thank you for having me on the show again. Take care, Tom. We'll see you in a couple of weeks.