 Yeah, what does it take to do heart, to have a quorum in heart? And we have Tom Yamachika talking tax with Tom this morning. Welcome to the show, Tom. Morning, glad to be on. So you talked about, just a moment ago, you talked about some hot news with Brian Black. Let's talk about that first, because we're interested in whatever happens on Gutton Replace. Sure. As you probably remember, for a long, long time ago, Common Cause, Hawaii, and the Civil Beat, we'll be set for the public interest, and what's the other organization, I forget, but they challenged one of the enactments of the legislature in, I think it was 2018. It started off as a bill regarding water safety and turned into one regarding recidivism or the other way around. The argument was that the bill was invalid because the version that ultimately got signed into law didn't receive three readings in one house. And the litigist later said, oh, poppycock. Yeah, the same bill with the same title received three readings in both houses and it received the final reading. What's your problem? The problem is that we're different bills in substance. And that is something that the Supreme Court of Hawaii held earlier today. They held in a three to two decision that Civil Beat and Common Cause and the League of Women Voters were right, and they struck down the law. They made it perspective only, so it only applies to that case and subsequent enactments, but it's now a very tangible limitation on the legislature's power to do gutting and replacing. It needs to have at least some germanness to the bill as introduced before they can keep counting and don't have to reset the count of hearings. Yeah, where does that phrase come from? Some germanness. Is that yours or is that the Supreme Court's? It's in the court opinion. Interesting, because there's a gradient here. Suppose they change the bill by 100%, we know the answer. And if it's zero, we know the answer. But what if it's 25 or 50% or 75%? We don't know whether it's some germanness and that may have to be decided later. That's true, although the court did say that there is a very, very heavy burden on the person challenging the bill. It needs to be proven unconstitutional, beyond a reasonable doubt. So it's very tough. So you need to have 100% or close to it in order to prevail, I think. Yonder reasonable doubt, was that the opinion also? Because that was in criminal conviction. Yeah, it's also the standard for challenging the constitutionality of the law. And that was not only in this opinion, but also some earlier ones. So what did the minority of two say? What was their rationale for wanting to leave things in place? They basically said, look, when the constitutional convention was considering amendments to the legislative process, they brought all this stuff up and they left the procedures intact. So people at the time were giving the legislative flexibility to conduct themselves in accordance with the constitution, but with a lot of flexibility because they are a critical branch of government. That's a pretty weak argument just on the basis of just logic, but also transparency is in vogue now and transparency requires that if somebody is gonna do a gut and replace, they let the public have a whack at the bill with hearings. And it seems to me... Yeah, a lot of times they don't. Yeah, yeah. And I think a lot of that's by design. If they don't, in the ordinary course, even with the, tell me what you mean. No, I mean, I think some legislative tours keep that tactic in their back pockets so that if they have a bill that's fairly controversial and they don't want to provoke public reaction, they wait until the last possible second, get and replace it in the final version where there's no more public hearings and just carry out negotiations with the other house or with their committee members and it's the cloud of secrecy. No, that's not transparent at all. And the public has never liked, and I have never liked it. I'm sure you have never liked gut and replace and it has suffered increasing criticism over the years. So this decision would be a popular decision and the two justices who voted against it, that would not be popular. Well, we at the foundation have been following common causes, a Rusty Scalpel Award, which is given by them and the League of Women Voters to the bill that at least resembles the form in which it was introduced. And we note that I think in the five or six years, the awards been given, tax bills won five times. That's a lot. In percentage terms. Yeah. Well, okay, thank you for that report on that subject. It's very interesting and it's a step forward for transparency and for good government. And thanks to the Supreme Court for ruling that way. And hopefully this will minimize gut and replace going forward, although it's still a question of degree. Yes. Let's move on to our main topic today and that's the Rapid Transit Board, HEART, and what their quorum problems are. A very interesting subject. Can you give us a handle on what has happened there and what the current state of affairs is? Sure. Basically, when HEART was formed, it was formed by a city charter amendment, of course, which requires a popular vote at the general election. And at that point, when HEART was originally formed, it was formed with a nine, I'm sorry, a 10-person board, okay, one of whom was ex-officio, so that person didn't vote. And in forming HEART, they cross-referenced another section of the charter. Which refers to boards and commissions generally. And it says, you need a majority of the entire membership to vote in the affirmative for anything to pass. And you also need a majority of the entire membership to have a quorum. Okay, so with the 10-person board- That's common, right? You would expect that. Then that's that common. Okay, because it's actually kind of strict because with that kind of wording, if somebody doesn't show up or abstains, it's the same as a no. So for HEART to have anything, to get anything done, out of the nine voting members, they need six to vote yes. And they need six people to quorum better. I wouldn't be bothered by that because the amount of money is, the biggest project ever undertaken in the state. Oh, that's what it was formed. Now, in 2017. Right, but you agree with- Something happened. That they did it intentionally because of the amount of money that would be involved. Billions, we don't know how much, but because it was so much money, it's not unreasonable to have that kind of strictness in the voting requirements, huh? Oh, no, but here's the wrinkle. In 2017, because the state was concerned of bailing out HEART and making sure the state funds, which again, amounted to hundreds of millions, if not billions of dollars were being put to good use, they inserted a provision in the bailout law, which is act one of special session, 2017, that says, the Speaker of the House and the President of the Senate will each appoint two HEART board members, non-voting. So HEART gets four more members and now they have a total body count of 14, which means that you need eight affirmative votes to accomplish anything and you need eight members to have a quorum. Eight affirmative votes means if two people don't show up, there's no action that can be taken. The same rule as before. Except now the magic number is eight, not six. Yeah, okay. So, and a couple of the members, the voting members now were heads of city departments and they're busy people, so they can't show up all the time. And of course, they can't delegate the votes either. So what happens? There was actually testimony put in, last legislative session by one of the voting members that said, look, we can't do anything. A requirement of eight affirmative votes out of nine voting members is just too much. We can't do anything. And that basically caused- How do you get the nine voting members? No, remember when HEART was formed, it had nine voting members out of 10. Okay, so there was a 10 member board, nine voting, one not. Now it has 14. Now it has 14 because the city had four more non-voting. So- Oh, the four are non-voting, that's a terrible piece. The four are all non-voting, yes. They're actually more like state observers, to give input, to watch the store on behalf of the state and the legislature. There was a mistake to do that. Well, they didn't know that. They didn't know that they would have a problem with moving the bar up to eight voting members to get anything done. I think that was an under 10 consequence, but that's what happened. Okay, and so now let's bring this up to today. During, I think, the June, July timeframe, Hoyt Zia, who is, I think, still a voting member, but at that time was interim chair. He got some new intelligence from Corp Council, and the new intelligence basically said, look, there's a Hoy Constitution provision that says that the state cannot screw with the organization of, you know, the city governmental departments agencies or other organizational units. And this city Corp Council opined that it was okay to not treat these four state appointees as members of the board because the charter provisions have priority over the state law under that section of the constitution. This sounds logical. And so he said, you're voting requirements now down to six. And that's what Hoyt said. Okay, even though there was a contrary opinion before, now we're doing six. Of course, this prompted some internal dissension, but it was six. And now, Kurt Fevella, who is the one Republican senator in our Hawaii State Senate, acting as an individual, he sued Hart, saying, you're not acting legally. You need to go back to eight. Why would he go to that trouble? And obviously it was gonna stand as an obstacle to action by that board. Well, I mean, Heath, for whatever reason, thinks the legislature's will is being thwarted. I mean, when the Corp. Council opinion came out, for example, Scott Psyche, the Speaker of the House, basically said, well, you know, if they don't want the legislature to input, then give us back our money. I didn't go anywhere, did it? But it's now a real problem, because, you know, can Hart make decisions? It's gotta make decisions in order to function. And can those decisions be challenged in the future if they're made by six? Right? That's basically the question that Senator Fevella is now bringing before the Circuit Court. Sounds like this has to go to the Supreme Court for a reliable determination, because the risks are so great on either side. And we have to have a statement of law on the point, don't we? I would think so. I mean, I think it's in everybody's interest to have some definitiveness in what's going on. And by the way, Senator Fevella sued under the Sunshine Law, Chapter 92. And anybody can sue under Chapter 92. You don't have to have standing. You just need to have, you know, some kind of defect in the procedure of a, you know, a board of commission constituted under state or county law. Well, my reaction is, gee, what is he thinking? Why would he do this? It's, it's destructive. And it could be based on, I don't know what he has said publicly about it, but it could be based on a general opposition to rail. Because... Well, that could be too. But I would rather the controversy be resolved sooner than later. I would much rather, you know, there be some determination now than, you know, you know, five, 10, whenever years in the future when the rail's built. And then somebody says, well, the whole thing's invalid. Oh, absolutely. On the other hand, if requiring that the high quorum is gonna stop them from taking any affirmative action, if there's anybody who's not available overvotes against them, they won't be able to do anything. So, you know, if you didn't want rail, you would A, gonna create a barrier to vote taking. And at the same time, create a cloud over any vote that would take them with less than the eight requirement that Favela seeks. So it really throws it into a cock-tack. And so another major substantive existential problem for rail, no? Yeah, and I, I like you think this is a problem for all of the taxpayers because this sucker costs so much, especially in Honolulu. And it's gotta be resolved quickly, I think. Well, you know, maybe there's some procedure time I wouldn't know of hand, but there were some procedure to get to the Supreme Court right away, even with some kind of provisional remedy to have them opine on this sooner than later. Because right now you have a project in which billions have already been spent, billions more need to be spent, however you like or dislike rail. And you have, you know, the disruption to Honolulu in general because of the construction. Gee, what a mess it makes. If you wanted to make a mess out of rail, this is what you would do. So it should at least get to the Supreme Court soon, even if it's a provisional remedy kind of emergency, you know, ruling. Well, the circuit courts can, you know, can do injunctions. They can, you know, render declaratory judgments and those typically get reviewed on appeal. There's also the possibility that the legislature can fix this, okay? There was actually- If the legislature messed it up in the first place, how can the legislature fix it? There was actually a bill or a couple of bills in this past session that were at least a name fixes to this situation. What kind of logical fixes? They would have amended the 2017 session law to permit or to say that the state-appointed members were not members for purposes of quorum or voting requirements. Yeah, it's nomenclature, but yeah, something like that where they're really only observers since they really are only observers. Yeah, no, I think that's right. And I think, you know, one way that the court can get out of this is to say, you know, look, we recognize that the legislature has, you know, the right to put observers on the hard board because this is fiscal policy and they do have, you know, rights on fiscal policy to make sure the counties are in their proper sphere. But I think I'm, you know, I agree with you that the side effect of calling them quote-unquote members and thereby raising the requirement for quorum and voting to eight was an unintended consequence. There's nothing about that in the legislative history. And I don't think the people in the legislature knew that this was going to be in effect. Well, let me line up the options that have come out in this discussion and otherwise and see which ones are most appealing. We need a solution. Going through the ordinary court system is not a good solution. It will simply take too long. It does require injunctive relief, provisional relief of some kind and a special appeal to the Supreme Court. Now that is, that's a maybe that that can happen and everybody will agree necessarily that this is such an emergency. Another way is for the legislature to act, it's November, the legislature will be in session around the middle of January. They can fix this pretty quickly and hopefully the governor would sign it. They don't have to wait till the end of the session. They can do this on day one, the governor can sign it. And so in January, we can have a solution. I don't think there's anything the city can do. Maybe you could agree or disagree with me about that. I don't think there's anything the city per se can do. The city council makes a statement that doesn't solve the problem. But maybe the attorney general of the state could do something. The attorney general of the state could opine that the bill cannot be construed as requiring real members, those four additional members on the hard board because that would be unconstitutional. And he puts his imprimatur on that opinion and that may help. The only problem is that he's not a court. He's only an attorney general. And his opinion doesn't have the same weight as a Supreme Court certainly. So which is the fastest way, Tom? Which is the fastest way to get this thing a square way? I think you need to convince people that there is a problem. And the fastest way to do that may be through the court system to get some kind of declaratory relief or an injunction. And then once people are sensitized to it, then there's a possibility that you can get legislative fixes. I mean, when I and the foundation challenged the real skim in 2015, the court system took a very long time and our solution did come out of the legislature, for example. So I'm not entirely writing off the legislature as possible to deliver relief because they've done that before. Well, it's the best one, isn't it? I think so, but they first need to be convinced that there's a problem. And I'm worried about that because there were three bills in the last legislature to deal with this problem and they weren't acted on. Well, how does the public feel about it? I mean, aside from watching this discussion, I suppose, how does the public feel about it? Does the public care? If the public is faced with this issue, if somebody raises this issue publicly, how do you think the public would react? And therefore, really I'm asking what the politics are. There are some people who just don't like rail and they would like to see the whole thing stuck. Other people would say... I think this is a very, very technical issue and it'll take a backseat to a public opinion on rail generally. If they don't like it, they will try to find ways to monkey wrench it. Like I think this is what Senator Fevella is doing. You know, he's throwing a monkey wrench at it. And then the question is whether it's gonna hit something, you know, whether it's gonna hit something important. How does the tax foundation of Hawaii feel about it? We're pulling our directors right now. The way I feel about it is we need to have a solution that preserves both the legislature's ability to appoint observers, which is what they did. And to prevent undue interference with the functioning of a legitimately created city instrumentality, which I think was an unintended consequence, but that's what's happened. And I think the state constitution does prevent that kind of thing. I think it would allow the members to be seated. And I don't think it would allow the vote requirement to be screwed with like that. And I'm hoping that the court will come up with that solution and right now I'm thinking of filing an amicus brief to suggest that very same thing. Yeah, that would be a good result if the court did that. Of course, there might be an appeal, you know, if a veller might appeal and then, you know, you'd have additional layers of delay. But let's assume you could get a court to do that. That would be a pretty good thing. Then go to legislature also to confirm that. And what about an attorney general opinion? I mean, if you went down to Claire Connor right now and said, can you give me an opinion on this? Would you get one or would you rely on one? Well, first of all, I don't know how long that would take. And second of all, I don't know the significance that it'll have. I mean, there are people with million-dollar contracts, billion-dollar contracts, and they have to be able to rely on something. I'm sure that's so, Tom. You can't spend these billion-dollar contracts without having approvals by that board. And so this has got to get in the way of some, maybe many contracts until it's resolved. Let me ask you this. If you were a contracting party and you had a contract sitting on Hart's desk, so to speak, and Hart was supposed to approve the contract, and Hart could not get those votes, would you rely on that? I don't think so. No, I'd be very uneasy until I got my eight votes. Yeah, yeah. So the six-vote thing from, I would say is not, I don't think that's gonna work, not in the case of a pending lawsuit and all. See, this is a real problem. And what does it teach us? We have a couple of minutes left. What does it teach us in terms of good government going forward? No, I think there needs to be a balance between having the real stakeholders at the table to give input and provide a solution as long as it doesn't gum up the works, which this apparently has. I don't know how many people in the public would care. I don't know how many people at the legislature would care about this apart from caring about real generally. It's kind of a technical thing, but I think it's of major importance, especially to the contractors, because they need some finality in knowing that their contracts are not gonna be set aside later on. So I think it's of critical importance, but it's very hard to get your head wrapped around it, especially if you don't know a whole lot about what's going on. It's a troubled project, for sure. Got all kinds of troubles, yeah. All kinds of one thing, F for another, and it's political, it's sometimes incompetence. It's a never ending parade of individuals who go through that board, who go through the management job in that board. Extraordinary, how many problems. Maybe it's not dissimilar from other such projects in the country, but wow, this one has had more than its fair share, I think, including problems with the federal government, including problems with federal politics. So if you ask me what we should take away from the whole experience, it's that- What should we take away from the whole experience, Jay? I'm gonna tell you that. Funny that you should ask. You know, this project is not a happy project. It was never a happy project. At the beginning, it was not a happy project and Mufi Hanuman crammed it down our throats back about 10, 15, maybe more, 20 years ago. And we all remember how he did that, but I remember we had a program with Think Tech and the Hawaii Venture Capital Association at which Neil Milner spoke from the university, political science professor and all that at the time. And Neil said this, you have a project like this, you have to get the public to buy in before you do the legal approvals. Not after. And in this case for this project, because it was crammed down this way, the public hadn't really approved it. And the public hasn't really approved it since, even though it was technically approved legally. And so I think that in terms of a big project like this in any community, you really have to sell it first and it was never properly sold. That's why it is not a happy project. Do you agree? I agree that it's not a happy project. Well, thank you, Tom. Thank you for this revelation and extraordinary issue that will affect us all, whether we like it or not, fiscally and in terms of disruption and delay in our community. I hope we can follow this issue going forward. I think there will be more, won't there? There sure will. Thank you. Tom Yamachika, Tax Foundation of Hawaii. And this is Talking Tax with Tom. Thank you so much. Thank you, chair.