 investigative report. Well, that has, you know, that has a certain intimidation feature right there. The word investigation investigative. So Tom Yamachika is going to tell us about this on talking tax with Tom this morning. Good morning, Tom. Good morning, Jerry. Thank you for having me on the show. So we have an investigative committee that was formed by the house to follow up on two pre existing audits made by the state auditor of number one, the Department of Land and Natural Resources Special Land and Development Fund. And number two, the agri-business development corporation to exact and the the scope of the committee's responsibility was to examine the recommendation made in those audits and for purposes of improving the operation and management of these state agencies, their funds, and any other matters. Now, the last few words of what I just said is kind of where things start going south. And any other matters, because according to the committee chair, that let her investigate it, that let her investigate anything else she want, especially the state auditor himself. Who's the committee chair? Della Albilotti. She was involved in earlier contentions with the state auditor, wasn't she? Oh, yeah. When the speaker of the house got side key put together a committee to basically rig the audit over the coals, there were several bills introduced by the house majority leader who she is to mess up their budget and merge them into another agency and that kind of stuff to basically get rid of the office of the auditor as an entity. Well, this sounds like a continuation of that campaign, no? Well, it could be. It's very suspicious. The investigative report has come out and there is an explanation or something like that in the report that explains to the reader why the committee decided to take its sites off the two agencies and onto the auditor. The report sets. Although the committee's initial investigation focused on audit report numbers 19-12 and 21-01 and the audit agency's DLNR and ADC, the committee expanded its focus to include the office of the auditor when the committee was one met with evasion by the auditor and answering simple questions about the audit process to prevented from reviewing documents that are the basis of the auditor's findings and recommendations and three, a prize of critical emissions in the audit process that may constitute malfeasance and non-compliance with generally accepted government auditing standards utilized by government auditing agencies throughout the country and represent a larger pattern by auditor condo to unilaterally decide not to report uncertainty of substantive and critical issues discovered in the field. You know, it sounds like that old scenario where you furnish the messenger for the message. Yeah, and that is why we're concerned. We, being the tax foundation of Hawaii, a watchdog agency, we consider the state office of the RGB a watchdog as well. They're supposed to, you know, take a look at how other agencies function and bring the truth to light, which is what a watchdog does. And, you know, it's like, you know, the NATO treaty of watchdogism, an attack on one watchdog is an attack on us all. Well, let me ask, you know, does the committee also have the power to say, look, you know, we found some flaws in your report and your methodology. No, no rancor here. Just can you go back and take a look at that and answer us a few questions? This doesn't sound like that. This sounds like not spent the company and we're punishing you. And it's different than what perhaps another investigative committee might do. In other words, we're a little concerned about the report and check out a few things and get back to us. It seems to me that would be an appropriate solution here. Instead, they're going much further than that. Am I right? Yeah, yeah, I think so too. I mean, and with regard to those, you know, reasons that are the cited basis of changing the committee's focus, okay, let's look at those. I mean, met with evasion by the audit and answering simple questions about the audit process. Now, that's kind of full of value judgments on, you know, what's a simple question and what is evasion? If somebody asked me about a tax audit, for example, and I tried to explain the procedure behind tax audits as I knew them, it's very easy for somebody to say, you didn't answer the question that I asked. You must be evading me. Second, the committee complains of being prevented from reviewing documents that are the basis of the auditor's findings and recommendations. That's because of the state statute that makes those confidential. Didn't this happen in the previous iteration of this kind of attack? He didn't want to reveal documents because they were treated as, because the state auditor statute treats them as confidential and they were criticizing them for that. That sounds familiar to me. Yeah, no, that's exactly what happened and this is just, I think, another iteration of that same argument. Well, it's very troublesome because it does have a certain aura about it that is not positive at all. I'd like to digress for just a moment, Tom. We just completed a movie with the help of filmmaker Kimberly Bassford here at Think Tech and it's called Scaling Up Hawaii's Food Future. We looked into the status of agriculture and development of agriculture as a way to feed the people of the state as a sustainability examination. We found that the legislature, and we talked to Donovan Delacruz and also Glen Wakai, and we found that the state really wasn't doing much and it wasn't spending much money. We talked to Todd Low, Department of Agriculture, and found the same thing. The state is not doing much and this, in a crisis, in a casualty of some kind, a disaster of some kind, we can't feed ourselves. We will starve. If those ships don't get here with the food, pretty much all the food comes from the mainland on ships, we will starve and so it's really critical that we get back to agriculture as one of the diversified elements of the economy. The legislature is spending 1% of the budget, I said 1% of the budget, if not less, on the development of agriculture in the state. We're not doing anything. We're talking it up, but we're not doing anything. To me, this is a really important public policy inquiry and to me, every state organization of any kind, and for that matter, NGOs, nonprofits of any kind is critically important to the state for the development of agriculture in our state. We have the land, we have the weather, we have the quality of soil. In most cases, we have the water, but we don't have the labor, we don't have the political will to do anything about it, and so this is a real sensitive issue as far as I'm concerned. Sure, and one of the findings in the audit of the agribusiness development corporation was, well, you know, what the heck have you guys done? That's good, and that is kind of the issue that's been debated aplenty in this current legislature, and it's all around, well, what are we going to do with ADC? Are we going to fold them into somebody else? Are we going to let them stay? What are we going to do with them? And there were lots of debates on that issue this legislative session. So somehow this is a hot issue. It's a hot issue because we haven't done anything. I don't know if there's any legislation pending, but we do have legislation giving money away. I mean, what did I see in Civil Beat this morning? Depending on your level of income, the state is thinking about giving you $100 to $300 bonus gift at the end of the session. So what's that about? Have we paid all our bills? Have we paid the employees with time and system? Have we handled the homeless? Do we not need that money in the state coffers? Couldn't we use that money on developing agriculture in the state? It's just critical to our sustainability in time of crisis. So I'm wondering whether we got our heads screwed on right about the priorities of holding and spending money. Well, that's been an issue for some time now. You may recall we have a constitutional provision that says if we have a surplus in the state general fund for a couple of years in a row, then we have to deal with it either by giving it back to taxpayers. That's item number one. That was in the earliest version of the constitutional provision. And then they added stuff like, well, or we can put in the rainy day fund, or we can pay down the fund for benefits to government workers that we owe. Well, okay. The OPEB issue. To me the last thing you would do in a time when we haven't paid our bills and we need to develop the infrastructure around the state is give it back. That's the last time, the last thing we would do. I don't understand, but you know, then I thought to myself, time I thought to myself, this is what I thought. I said gee whiz, it's 2022. It's an election year that has a lot to do with it, right? Well, of course it does. Every one of those people in the square building is up for reelection. So what better way for the incumbents to demonstrate their, you know, concern for their constituents, unquote, by, you know, giving them a check. I think, and, you know, it wasn't their idea originally, the governor introduced it. And the legislative leaders stuffed it out earlier in the session, but then they decided, well, let's maybe let's bring this back. Maybe it was a good idea after all. So that's what that's what they're thinking right now. Too bad. I mean, we are so far behind. I mean, last time I looked, we had either liquidated or unliquidated bills to pay of 40, 50 billion dollars. And we're giving it back. And we're not making any plans to diversify the economy. And furthermore, we're not even taxing the one area of the economy that's, that's, that's prosperous, that is hospitality. So I don't understand how you make that decision about giving it back. But I want to ask you, that's a politician for you. Okay. The other, the other issue that this audit dealt with, and we've previously had shows about this on here on Think Tech, was the Department of Land and Natural Resources and its Special Land and Development Fund. And that, that, that Special Land and Development Fund basically concerns when the state owns properties and leases them out, this is the money that comes back from them. And the question came up as to, well, is this being treated properly? So we had a gentleman on our show, his name is Keith Chun. He gave us a lot of information about what really was going on because he used to work there. And he said, look, you know, I made specific recommendations to management. They were ignored. These people, like, have no idea how to write a percentage, you know, percentage rent lease. He cited the example of one particular hotel where the percentage rent was based on the year to come, rather than the year previous. So apparently the people in the, in the hotel took the position that, well, we don't know how much revenue we're going to get in the year to come, so they paid no percentage rent at all. Oh, no. And the, and then the, and the state accepted that for a number of years. So this is the kind of stuff that Keith wrote about, that the auditor wrote about. What did the investigative committee find? Oh, it was an inverting oversight. A lot of money involved, though. Yeah, I mean, in the business community, even if it wasn't an inadvertent oversight, you would have the lessor, you know, going to the lessy and saying, well, look, under the lease, you're a percentage rent. You didn't pay it. So we need to get it out of you. And if the lessy says, well, you know, go take a long walk off a short pier, you know, you're in court. Well, what is, you know, gee whiz, this is, this is, however you cast this, it doesn't lead to a good result. The outcome isn't good. The outcome isn't good with that DLNR fund, and the leases, and the outcome isn't good with agriculture. We should be looking at the public policy aspects of this. So query, you know, we know that less condo disputes all of these attacks on his agency. How has he responded to the attack on his reports on the agribusiness organization? Well, he did submit a very lengthy response. And the, you know, to the committee's credit, they attached it to the report as an appendix. They attached Keith Chun's response as an appendix to the report also. So you know, query what it does back there, you know, in the, at the end of the report, but it's, but it's there if you want to read it. Well, where's this going? That's the thing. What can you expect with, you know, with a report of this nature? You know, not a whole lot. I mean, in the report itself, the committee complained mightily and loudly about, well, geez, he didn't give us enough time to do anything. Yeah. And then then you go around smearing the auditor. Well, you know, that's, you know, it feels like a strike, rather a spare, a spare in bowling, where you get one pin on the left and that's the agricultural, you know, development community. And you get one pin on the right. And that's the auditor. In this case, both pins went down. I don't think this helps the development of agriculture at all in the state. Which should be a very high priority. And the smear somehow, you know, with all of these events doesn't help them. It hurts them. Likewise, it hurts less condo and the auditor. So what's the, what's the benefit of exactly? I mean, I'm trying to look, I'm trying to be open-minded about it. What is the benefit of writing a report like that, attacking the messenger for the message? Well, I mean, you really can't expect that the message justify a whole lot of stuff, because as you might expect, the findings critical of how, you know, the status quo have said X. And the report says, well, the messenger is a dimwit. So let's keep going with the status quo. You know, what evidence is there or what justification is there to depart from the status quo? So there it is. There it is. I mean, you really had an important point. So it neutralizes the report of the auditor. It makes it a non-report. I mean, he's been dinged for it. And the two of them, right? He's been dinged for his reports, and they are essentially neutralized. They have no effect. He's kind of stopped in his tracks. At the same time, to the extent that somebody could have, should have, would have said something to improve the operation of these agricultural organizations, that is also undermined. And you never get to the substance. You never find that. Yeah. So that's what happened with Mr. Chun. He, he's a well-meaning individual. He collected lots of evidence and, and, you know, specific factual circumstances that he gave the committee. The agency says, oh, well, I'm sorry, you know, this is, this is a one-time error and, and it won't happen again. We really promise, you know. And then, of course, nothing happens. We do expect anything to happen. I don't think so. Now the money's lost. Yeah. The money's lost. B, there really is no, no pressure on the agency to, to, to depart from the status quo. Because, yeah, there were audit findings. The audit findings are now neutralized. The, the messenger who brought them is neutralized. The, the, you know, the other messengers who came in with, with, with important information are being kind of like shunted to the side. So, so where, you know, how do things get better? Well, I guess the first question is why? I mean, what is, what is the task? What is the mission of this investigative committee? And who decides what they investigate and where do they get their members and how are they operating? Are they operating properly? You know, investigative committees have a lot of power, especially when it goes to the press, which this did. And, and the previous instance that it did go to the present became a public spectacular. What is the point of the investigative committee? How well are they operating in general? Well, the investigative committee, you know, can be made by a resolution that the house members vote on. And in this case, they did the enacted house resolution number 164. And that's what, that's what spawned the investigative committee. The speaker then appoints members to him committee in both cases. Is it the same committee in the one case? And in the second case you've been talking about? Yeah, the same committee investigated both the ADC and the DLNR. Okay. Yeah, I mean, they were given, you know, a double barreled mission there. And so, I mean, all it takes is a resolution by, you know, is the house or the senator both? Is there a political edge to this? Or is this the kind of thing that happens all the time? This is the, this is the first investigative committee of its kind that we've seen in a very, very long time. I mean, when the committee was starting up, they were saying, well, yeah, we don't really have a precedent. We went back several years. And then there's really nothing to go on. So we're kind of making some, some stuff up like the, you know, the procedural rules of the committee and so forth, because there was no, there's nothing they can cut and paste from. How would you fix this? How would you make a committee like this beyond, beyond politics, beyond retribution, to come up with a, you know, positive, even-handed kind of investigation with positive, even-handed recommendations that are actually constructive in the sense that they, that they enhance public policy? Well, I think as long as you have the right people doing it, it would be okay. Like Rep Kobayashi was on the committee and he really wanted to do the right thing, I thought. Rep Tarnas as well. But, you know, you know how it is in our state legislature. If you're not the committee chair, you know, you may as well, you know, be a potted plant. Well, that speaks of larger issues. You know, I'm just, just as a footnote, I saw another article this week about how the Supreme Court's action on gut and replace was now being tested. Tested, thank you. And that there were forces in the legislature trying to get around that decision. This is an attitudinal thing. Any comment on that? Well, not at this time. I mean, I certainly want to see what the legislation looks like in its final form. If it's, you know, if it's signed into law, then then I think, you know, our organization as well as others are going to weigh whether, you know, whether it's beneficial to challenge it. But that that's that that issue is going to be still there. In a larger sense, though, it's really a core point for our discussions together, Tom. It sounds to me like we need reform. We need reform on how things work. And we can talk about other areas of government, but at least in the legislature. Well, not not only there, I mean, you know, it's kind of a telling thing that in the investigative report, it quoted, you know, for less condos criticism, a quote from the former city auditor. Okay, Edwin Young, I think his name was saying that Mr. Kondo was the poster child for poor auditing. Well, this this dude was at the city. And you've got like, you know, multiple waves of federal indictments going through there. You got your you got your problems at Department of Planning and Permitting. You have your K Aloha, you know, settlement, you have, you know, the the Corp Council going down on indictment, you have the chief of staff going down an indictment, you have the head of the police commission going down an indictment. What the hell kind of shop is he running there? Or was was he running there? Because he was it was it was his shop at the time. So is is he like the pot calling the kettle black? Yeah, interesting. Where is this? But where what what do we do? What do we do? If if you were, if you represented a candidate running for office this year, this is an election year, what would you tell your constituents or your voters that you would do to start the ball rolling on this kind of internal reform that would clear these things up? You know, that's that's a really tough one. Because a lot of these things are, you know, well ingrained. And it's really, really tough for one person to try to unwind things. Because it's very, very easy to get clobbered when you attempt to do that you or the or the crab crawling out of the pot, all Hawaii Hawaii references for many, many years. The other question is, is this also is it also a function of gubernatorial leadership? I mean, could we have a certain level of reform and focus in the legislature? If the governor took a more positive role on these things? I think so. I think if there was a lot more definite direction being, you know, pushed through this process, you know, and you know, come on, I mean, these were executive agencies in the first place. Okay, it's within the governor's power to say, you know, look, Mr, you know, Chairman of DLNR, clean this stuff up now. Yeah, right. It would just be a kind of policeman at the elbow sort of thing where you tell them as a sort of big brother, you can't do this. So where are we in terms of the, the I guess it was indictments of a couple of legislators and then more recently one legislator was found to have, I guess, used campaigns, funds for private purposes. And so there were three of them in the past month or so that were embarrassed with, I call it. Yeah, I think the first two pleaded guilty. And then the third one, I think is going to pay a fine or something like that to get the case closed. So what I'm getting at though is that these three in a row, I mean, they all really have the same effect on public confidence in government and specifically in the legislature. Yeah, it doesn't help. Doesn't help at all. No, it doesn't help because, you know, you say to yourself, okay, well, these guys got caught, but what about the guys that did exactly the same thing and didn't get caught. So you got to wonder about that. Yeah, I mean, the average person is going to wonder about that. And he's going to draw some conclusions from the three cases and say, maybe I should be concerned about a whole institution. So I guess the moral of the story then is when you go to the polls, you know, you try to find out as much as you can about who you're voting for. How do you do that? How do you do that, Tom? Because sometimes it's only in the back room and you would never find out. Well, I mean, during the campaign process, lots of things come out. You hope that more comes out. We, you know, we need people to be challenged if they're unopposed, then none of this is going to happen. Not necessarily by, you know, the other party, but even by the, even with the same party, with, you know, somebody who generally, genuinely desires public service and who wants to make this place better. I think the one takeaway point I would take out of your comment just now is that more people are run for office. And that breaks the phenomenon where somebody can stay in office for term after term after term, and they become, you know, entrenched. Thank you. There's an organization that I heard the name of, and I just want to mention it. It's a national organization, but the idea is that if you want to save democracy, make it more robust, you run for office. And this is called run for something.net, run for something.net. And the woman who was the founder and runs it, it's a substantial organization now. And you can look at their website is Amanda Littman, L-I-T-M-A-N. And we can, we can enjoy an organization like that here. I don't know if there are any, but certainly the notion of that national organization could spill over to individual states and for that matter counties. And we could have the benefit of ordinary citizens who say, gee, it's not, it's not that I'm angry and mad and I'm not going to take it anymore, although that could be, you know, one motivation. It's that I feel I have to do my duty in order to keep them all straight. I have to run for office. I have to read up. I have to make the arguments that, you know, contending candidates make. And I have to keep the process, you know, active. And so I think more people should run for office. Whether or not they get the blessing of the party, whether or not they get, you know, for example, union endorsements, they should still run for office and make their case. What do you think? No, I think I would, I wish more people would do that. That they would make their case to the people and run for office. Yeah. And try to help, you know, once they get in. Yeah. I think a lot of people are intimidated for the fact that, you know, raising money ain't so easy. And sometimes a person in office who has collected money on an unopposed race will apply that money to, you know, somebody who is opposed, who the party wants to favor. And it's kind of perverse. And the first time candidate doesn't have those benefits at all. And so you have to have a strong stomach and you have to keep on trucking. And even if only one in a few actually get the home base on this, it's still worth the process. It's still worth the effort. Right here in Hawaii, it's still worth the effort. And maybe, just maybe, we can sort things out a little better in terms of priorities and follow through and for that matter, clean procedure. That's great. Okay. I think we're out of time, Tom. But let's plan on doing this again in two weeks. And we'll find something else of merit, of note, because I guarantee you there will be something else. Thank you very much. Tom Yamachika, Tax Foundation of Hawaii. Thanks for having me on the show. Take care. Aloha. Please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram, Twitter, and LinkedIn, and donate to us at thinktecawaii.com. Mahalo.