 Welcome back to Think Tech. I'm Jay Fidel. This is Talking Tax, Talking Tax with Tom Yamachika. Tom Yamachika is the president of the Tax Foundation of Hawaii, and he comes on every couple of weeks to tell us how our taxes are doing, and that often means how the legislature is doing on our taxes. Well, good morning, Tom. Welcome to the show. Good morning, Jake. Glad to be on as usual. Great. So, you know, it's been quiet, but tell me, you know, what the echoes are and what the future is for the legislature and thus for taxes in Hawaii? Sure. The silence is kind of ominous, actually, because the legislature's schedule for the rest of the year has come out. They're going to be reconvening next week, Monday, the 22nd. They do not have any time scheduled for conference committees. So that makes me think that whatever is going to be considered is predetermined. It's something like the special session of 2017. Everybody knew that once the bill came out, there would be fewer little changes. It would be passed as is, and that would be it. You know, people testify to no end, but, you know, no changes were allowed and the bill was passed as is. So I'm just kind of wondering if we've got something in the works this time. One of the things that obviously will need to be considered is the 650 million or so that has been put into the rainy day fund into the rainy day fund. From the federal money that was given to the state on condition that we spent it by the end of the year. Okay. So the legislature was last in session at the beginning of this month. Apparently they couldn't figure out what to do with it. So, so they parked it in the rainy day fund so the governor could couldn't get his hands on it, or at least so they thought when one senator wrote an op it basically saying well come on guys I mean this is what we should be doing with the money we should be giving COVID relief to our citizens rather than squirreling it away. But that of course is just one senator's opinion and, you know, given that she felt the need to speak out like that. It's probably not the majority opinion so we're going to see something else happen. I think I mean I very very perceptive I think if the majority felt that way there would be no no purpose in the op ed. That's right. Very interesting. But you know what you know there's something I know that the Sunshine Law does not apply to the legislature although there has been discussion of that from time to time. And you know conference committees are you know beyond our reach essentially they they do what they do and we may see a little of it but we really have no say in the proceedings or in the result of a conference committee meeting. On the other hand committee meetings themselves are open to the public and the public testifies and it's written testimony and the like. It's troubling to hear that this is going on behind the scenes. It's troubling that, you know, they didn't want to have a session for whatever analysis they made on COVID I'm not sure it was right. And then we didn't have we didn't have any really any public discussion about these issues, especially in a time of crisis that would have been better to hear from people instead. So let's visit legislators and legislators talk to each other and and the process is opaque, and then it pops out without a conference committee and predetermined and they will have it. Is that trouble Utah. Of course it does. I like to think that, you know, if you're taking the trouble to go down and testify before the legislature you have at least a chance of, you know, shaping the final product. But apparently there are. This is at least according to what I'm guessing. This has been foreclosed for this session. That's what it sounds like. So, okay, so the 650 million I mean which which way is the wind blowing and that it sounds to me like there is really no issue, no issue at all. That the state of Hawaii must take that out of the rainy day fund and spend it on its citizens plenty of discretion and how to spend it, but there's really no discretion on not spending it. And that really has to be part of their agenda here when they reopen don't you think. Yeah, and guess where it's going it's probably going to public employee unions. We have the, at least three of the Hawaii public employee union leaders. They're all saying they won't agree to price reductions they won't agree to layoffs they won't agree to furloughs they want the increases that were negotiated before COVID-19 ever became known as a as a household term like it is today. And they are not budging. At least that's the position they have staked out in the publicly released letters that they have that they're out there. If that issue had come up in a committee, where the public, you know, could testify who would be there, aside from the unions themselves who were making that demand. Who would be there who would be opposing this particular, you know, method of spending the money. We might. Depending on how they wanted to fund their increases. If if there was a tax increase propose we would certainly be there saying, you know, this is not a good idea. But if there was a tax increase, which remains our opinion, what would you say to them if you were there testifying on that issue. I would say look guys you have to consider the economic engine that is spitting out all of your taxes in the first place. If you're going to squeeze it further and put more breaks on the economy. Then the result is that the engine is going to spend slower and it's going to give you even less revenue than you have now, which isn't which isn't much. That that that also, well, I mean, fairness goes goes several different directions. I mean, like, the teachers are going to say well it's it's it's fair for us to have the increase we bargain. It's fair to have a wage commensurate with other jurisdictions in the United States that are that are performing similar where teachers are performing similar work. It's fair to to have the people in the government who have been downtrodden for so long finally get a living wage or arguments that effect. Yeah, but it's at the expense of others who get nothing that that troubles me. I mean, I think we should all be pitching in. Don't they tell us almost every day we're in this together. And that means everybody has to sacrifice something so that everyone can survive. Well, I mean, that's that's definitely not what what Corey Rosenley said in in his op ed that was published in civil beat. He was basically saying shared sacrifices for the birds for the you know for the reasons I stated. Wow. Okay, well that's something and troubling. So, so this bill would would simply take it out of the radio, the rainy day fund and what spend it, or would it go to some government agency or executive to allocate it in the way either the way the unions want or the way other members of the public. Well, we don't know we haven't seen the bill yet. I don't think it's I don't think it's good draft. Probably be inserted something that that's already alive. Because, you know, really, we weren't dealing with a rainy day fund appropriation before. And not of this, not of this magnitude. That's also troubling that we're going into a session where there won't be the normal process where bill will be considered that we have not even yet seen that will be tacked on, be quietly onto another bill, it won't be easy to find it even. That's all back room stuff isn't it. Well of course it is I mean we and we've seen that before. There's, you know, some lawsuit activity going on, you know, by common cause and the League of Women voters to, to try to kind of roll back this logarithm but it's still in the courts. There has been no, you know, decision as a, as of yet. You know, and we've seen in the past legislators make open threats that, you know, if the judiciary does something they don't like, you know, their budgets at risk. That's actually happened. That has happened, yes. And, and the Senate, and the Senate majority leader on on a civil beat. I don't know what it was some kind of event that they had but but it was it was it was videoed and the video is available for for all to see. You know, he basically said that no uncertain terms. Institutional retribution. That's not appropriate in our government or our democracy. Well, I mean there are checks and balances. Yeah, somebody can stop it. Yeah. So each, you know, each branch is supposed to be a check and balance on the other branch and there are three branches judiciary being one of them. So, so, yes, I mean, the legislature is within its rights and, you know, doing something to check the judiciary if they, if they think that the judiciary has done something wrong usually, usually, however, it's by the statute. Yeah, yeah, yeah. Right. If the judiciary has interpreted a law wrongly they, they can amend the statute. Yeah, that's the normal. That's a civilized way to do it. Yeah. I mean, if it's a constitutional provision, of course, it's a little harder, but Go get an amendment to the Constitution, I suppose. Yeah. Well, I, you know, that's troubling. And, you know, and particularly in light of the fact that the checks and balances in the federal government are broken. That's, that's a euphemism is much worse than that. But you hate to see that the checks and balances here not working properly, not working on a substantive basis, working on retribution rather than, you know, correction of a law that legislators feel is wrong. Anyway, I'd like to go to tax now for a moment. Last time we talked, we talked about $2 billion shortfall and the Council on revenues and dire predictions. And I would say in due of the resurgence of COVID in our community, which was predictable because the reopening was maybe didn't have a plan. That's what Glenn Wachai made a comment at the Chamber of Commerce webinar a couple of days ago to the effect that he was concerned that the state did not have a plan to reopen. So if you reopen without a plan just as on the national level, you get a resurgence is what you get among other things. And so we have a resurgence and it may be worse, not clear depends on, I suppose, on many factors. And that means that if you if you put the Council on revenues together today, right now, and it's up to update their $2 billion shortfall. Okay, it probably would be worse, wouldn't it. So if did we solve the $2 billion shortfall they talked about before. And if so how, and what would we do if it was more than that. I don't, I think you're right in that there is no, there is no coherent plan. I have I haven't seen one. I think there was something that the governor had posted on his website with which had lots of little rainbow colors on it. What wasn't clear from it is when we go to the next stage of the plan and it was meant to be loosey goosey. So that it would be data driven and, and, you know, you'd make the decision on whether to go to the next phase 14 days from when the first when the previous phase started. But, but the problem there is that, you know, if you're a business, you depend on tourism like most businesses in Hawaii do. What can you plan on. You don't know when the tourists are coming back. You don't know when the flights would be able to resume without a, you know, 14 day quarantine. How do you know when people are coming back. If you have even a food establishment, let's say in Waikiki, where most of your, your revenue comes from, from tourists. How long can you survive on takeout with and kind of business when what you're primarily geared for the tourist business is not showing up. Let me answer that. No, we don't know. And the way to make those things happen is public confidence, public confidence on the mainland about, you know, along people who would be tourists and public confidence here with people who would be consumers and outside consumers. You generate public confidence in a time where covert has ruled. And the answer is, you do a lot of things to make it safer. You do everything you can to make it safe you spend money actually to make it safer and then you publicize that you say we have done X, Y and Z. It is as safe as it can be. It is a lot safer here than other places. You get the numbers down. You get to safety up and one of the interesting things that we, we found this week is that D bed is doing a webinar on ultraviolet light as a way to kill the virus. This is done in some hospitals now in the country but it's not ubiquitous. And apparently the science has developed to the point where you can use ultraviolet light and control circumstances is a certain danger to it. And you can kill the virus in institutional settings. So hotels are a really good example of that. So if I do that and a bunch of other things and I control the flights in and I can adjust people in a humane way. Then I keep the numbers down. Then I can go out to the public and say we've done all these things. And it is safer. Come on back. Have we done that. We haven't done that. And even within our own population you have, you have I think pockets of people who are resisting being cooped up. They're saying their civil liberties to being infringed, which is not an insubstantial argument. I have an argument too. My civil liberties are being violated when they come out. So there's a balance there at best. And if I were sitting on the bench I would say sorry. But the community civil liberties are more important than your individual civil liberties. Well, but at what point I mean right now. We have, I think five new COVID cases a day. Among a state with a population of a million and a half. It's not like, you know, New York or Arizona. Where there, you know, whether people are dropping like flies. Oh, but it's on the way up though. I mean, not every day, but it has a trend up now. And the problem there is that the average show. I'm the average show sees that as the possibility if you geometric increase. If it's up it could be way up the next day. You don't know. If it's down, you know, you're not nearly as concerned. Yeah, so I mean there's, you know, prediction or guessing needs to be done in any event. The, you know, the real rub is, you know, what do you do? Do you do take an extreme position and lock everybody down. And I think the, there was a survey from wallet hub or somebody like that. That came out and said, we had like the, you know, the fourth or fifth most restrictive set of lockdowns in the country out of out of the 50 states. So we're kind of, you know, getting up there in terms of abridgment of civil liberties. I think in part, I think you need to trust your people, or at least most of them to do the right thing. So you can say, well, okay, yeah, you can come out, but you, but you got to wear masks here and there and stay six feet apart and wash your hands every so. And you can control things, get them down to a manageable level. We're definitely not at the point where we're overwhelming our hospitals. But, you know, part of the justification for the lockdowns has, has been, you know, Governor Egan is in his emergency proclamation saying, Oh my God, we have this. We have this terrible pandemic. It's, it's going to go up and overwhelm our hospitals and we can't have that. But nothing close to that is happening. And that is why there are lawsuits challenging. The, the, the lockdown. There's, there's what in federal court. And just filed a few years ago. Well, you know, problem is with all of that. We're not, we're not putting ourselves in a position and we are not actually in a position where we can say to the world that this is a really safe place. We can't say that to ourselves and certainly we can't say that to, you know, the rank and file in the community that, yeah, it's safe, don't worry, go out to a restaurant. And so, I mean, without that, I, I don't know, I agree with you. They can't be a plan, because it's, it's so vague, and you don't have public confidence. So that time, you know, they're the other side of it, by the way, is you target certain industries and certain activities, you know, like, like we said that some activities were essential, you know, we started this thing. Well, you could go out and you could say some activities, you know, we should encourage. And we can probably make a list if you and I got in a room, we could probably make a list. Yeah, and I think somebody needs to come there, I mean, to come out and say, you know, look guys, here's our plan. We're going to we're going to reopen quarantine in X number of days. We're going to expect, you know, this this and this to happen. We're taking the following steps we're going to have thermal scanners at the airports we're going to have, you know, people who, you know, cough or sneeze, you know, yanked off and put in a room until we figure out that they're really in fact okay, we're going to have testing we're going to have this we're going to have that right now none of the none of the elements are being publicized if even if they are present. Yeah, so you know the trick about it is, you've got to solve this or at least people have to believe you're solving this before you ask them to reopen on this in the state of Hawaii. I think the argument would be this argument would be extremely persuasive. You guys we need your help, because if we don't get help from the community, we're not going to be able to reopen the economy, especially the tourist economy. With your help that you follow these rules and join together with us on this, we will be able to reopen our major, our major economic driver. So how about pitching in. How about a little sacrifice. How about following the rules. I think I'd be very persuasive don't you. Well, I know one of the complaints that, you know, in the black lives matter incident, when, you know, those shootings happen. We're waiting for national leadership to kind of step up to the, to the camera and say, you know, hey, let everybody let's have some calm. Why don't we on a local level have have the governor or somebody step up to the camera and say what you just said and we, you know, we can beat this thing. But we need your help. I mean Cuomo did it. He's he's out there all the time. Where's he going. Well, I, you know, the civil beat is just before the show I was looking at it and I saw a bunch of legislators. There's some officials I don't think he was in the picture. There's a picture of people who from government who were determined to make a program on police abuse and violence here in Hawaii. You know the political issue of the day, if you will, happening all over the country. And that primary importance right now in Hawaii. We don't have, you know, all that much. We have some, but we don't have all that much police violence or abuse and, and you know, in better times maybe we could, maybe we should really focus on it. You know, the focus is getting our economy started again. And thus, the focus should be on getting our people confident of our efforts in dealing with COVID. So why are you doing this? Why are you spending time? Why do we have ink running all over this? We should be dealing with the real crisis. You certainly need to have people confident enough to go out into the streets once again, and not being afraid that a cop is going to put a knee on their throat and, you know, kneel on it for nine minutes. You can't have that. I mean, people have to be, you know, feeling safe enough to go out doing their business and knowing that the police are protected and deserve as opposed to, you know, God knows what else. So yeah, I mean, maybe some ink and effort on the part of our legislators is justifiable. But, you know, maybe just, just kind of to the point where you need, you know, the police chiefs of the various counties to say, okay, you know, this is our revised policy on the use of strangleholds. This is our revised use of policy on the undeadly force. You know, Honolulu, for example, has been sending the wrong messages. They've put out a document with our stranglehold policies and it's all redacted. You can't see what the hell it is. And goodness gracious. More of the same opaque. Hey, before we close, let's talk about one other thing, which is dear to your heart and mine and should be dear to all of our hearts. What about taxes? What about state taxes which traditionally have been among the highest in the nation. And our budget is in trouble. And the legislature is about to go into session again. No man's life, no woman's life is as what's safe for that when the legislature is in session. What can we expect if anything about increases in taxes. Oh my gosh. I'm sure it's going to be discussed. I'm sure it's going to be discussed. The, you know, the $65 million question is, what if anything, are they going to do. Okay, hopefully, the answer is that, you know, they're going to do a little if anything with respect to raising taxes. But we, you know, it's probably already decided, whatever the answer is, it's already been decided. We're going to find out what it is. And unfortunately, that's what we can look forward to in the, you know, in the latter part of June, beginning part of July when our legislature resumes in session and kind of proceeds a pace to its adjournment. And then the press will cover it as a as a fact. Okay, this has been done. I'm not sure what will happen on the governor's desk with respect to veto but the likelihood is he'll have no choice but to sign off on that. And then you and I will comment on it. We'll say what we think about it, because they have to be two hands clapping your time. And you and I, especially you are the second hand. Thank you very. Thank you very much for coming down. Always enjoy these discussions. And I look forward to the next one with some trepidation. Tom Yamachika president of the tax foundation of Hawaii. Thank you for having me on the show.