 thinkTek Hawaii. Civil engagement lives here. Aloha, and welcome to Hawaii Together on the ThinkTek Hawaii Broadcast Network. I'm Keeley Ikeena, and today we're going to talk about a measure that will be on the Hawaii ballot on November the 6th, 2018, during our general election. It's an important measure from the point of view that it deals with education. And yet it may not be everything that meets the eye. Today we've got two people who actually have studied it very carefully and they're deeply concerned about it and want to communicate to the public that we've got to be very, very careful. My guests today are old friends and I'm so glad to have them here. Randy Roth needs no introduction. He's a true public intellectual. He's someone who has been in the academic world at the University of Hawaii Law School and retired, but has also been involved in public policy and has been in a sense a legal watchdog for the state of Hawaii. My other guest is Stanley Lau, someone who's been an up-and-coming entrepreneur who operates a business that employs people here in the state of Hawaii and he cares deeply about his employees as well as the consumers here in the state. Please welcome to the program Randy Roth and Stan Lau. Randy, welcome to the program. Thank you much. Good to have you. Stan? Thanks for having me on the show. Thanks so much. You know, right at the outside, let me ask you this question. I'm going to start with Stan here. You're a businessman. You've got food to put on the table for your lovely family. You've got a lot of employees and so forth, but you're taking off huge amounts of your time right now to get involved in a public policy matter, a ballot measure. Why are you doing that? It's one of the biggest concerns that I have as a, like you mentioned, a father of a young family and having spent time on the mainland. One of the concerns is, especially moving back to Hawaii, with the cost of living here, how can we as a young family and others in a similar situation continue to stay here to thrive here? And I think that's a big concern. I'm sure there are a lot of people who've had thoughts of moving away to the mainland and with a measure, a proposed constitutional amendment stated this way. I think one of our concerns is we already have such a high burden in terms of taxing and cost of goods, homes. What can we do to make sure that people here can continue to stay here? So we're going to get into the details of that later on, but you obviously feel that if this measure is passed, it's going to be bad for the consumers here in the state and maybe bad for the very people it's intended to help the teachers and the children. Let me ask Randy, you know, you're basking in your retirement. You've had a wonderful career. I've discovered that I'm very good at retirement. And yet you've been passionate about this ballot measure called the CONAM, the Constitutional Amendment. What drives you to get back into the fray? Several things. My background includes tax policy and I've been on the state tax review commission and I care about the integrity of our tax structure. And I think this proposal would be very bad from that standpoint. But more importantly, I've worked very hard for a long time, 27 years as an advocate for public education in Hawaii. And I think there are major problems with public education as a system in Hawaii right now. Unfortunately, I think this constitutional amendment issue is a real distraction on its face. It's all about helping public education, but I think that's just a facade. And I think that if it were to pass, it would actually be disadvantageous to public education. And I hope to explain why I feel that way a little bit. Well, we'll definitely hear from you on that. Maybe you can help me out at the very beginning here. Let's take a look at the actual ballot measure that will be voted upon by Hawaii's voters on November the 6th, 2018. From my understanding, it's very short, very simple. It says that the legislature, if it is passed, would be allowed to add a surcharge to property taxes for the sake of education. Is that basically it? That's basically it. It doesn't use the word tax. Obviously, we're talking about the authority for the state to tax real property. That's absolutely right. Pause there for a moment, because it does talk about placing a surcharge on property, but property taxes that would be there. But you're saying this is actually a tax? What is a tax? Well, a tax is a forced exception. Okay, so that's the key. To where property owners have no choice, they're given a bill. Currently in Hawaii, we have real property taxation, but it's done by the counties. And so somebody like me who cares about the system, we like that there's political accountability. That if taxpayers think that there's no need for an increase in real property taxes, but the county's increased real property taxes, the taxpayers know who to hold accountable. And accountability is critically important in a representative democracy like we have. But once the state also has the authority to tax real property, so that some of that bills, because of what the county's doing, some of what the state's doing, you lessen political accountability. It makes it harder for taxpayers to hold anyone accountable. So one of the concerns you have is that we're taking power away from the counties, which is the most local level at which we can hold people accountable in terms of political power. And we're giving it to the state. We're allowing the state to dip its hand into the pot that really the counties have. And it's even worse than that. Not only do you lessen political accountability, but this would immediately adversely impact the counties because their bond ratings would go down. The bond rating agencies right now, they say, you know what, when the county wants to borrow money to put in new water lines or sewers or what have you, we're pretty confident that they can tap the public, they can raise real property taxes as necessary. So the bond rating is really quite good. The interest that the counties have to pay is really quite low. But once the state has authority to start imposing real property taxes, the bond rating agencies are over here saying, wait a minute, now it's anything but a given that the counties are going to have room, if you will, to increase taxes in order to pay for some bonds. And so the bond rating would change immediately. We would hurt the counties and slowly but surely the counties would find it harder and harder and harder to pay for the basic services that they provide, police, fire, etc. So what you're saying basically is that there would be unintended consequences. Things that don't appear on the surface when you mark your ballot on the polls, but ultimately could hurt our economy and not only our economy, but the very teachers and the KK that are purportedly the ones that are going to be held. Let me just add that unintended consequences obviously can be very bad just in and of themselves. But this would be predictable, predictable negative unintended consequence. So whether it's intended or not isn't the issue. We can see if this passes sooner or later it's going to have a major impact on the counties and it would start to have an impact right off the bat because of how the bond rating agency is. In other words, it's not just a far-fetched interpretation you're making. You're saying you do this action, you're going to get this consequence. If I drop a rock it's pretty sure it's going to head toward the earth. We'd have to close our eyes, which is part of the problem. Stan, some of those unintended consequences translate into problems for everyday residents, many of whom are renters in our state. How does that affect you as a business owner? So we, our business took an informal poll and about 75% of our employees rent. A lot of them rent walk-up apartments that are easily over a million dollars. Currently there is no threshold. The HSTA reports that there's a one million dollar threshold and even if that existed we'd find that in running some of the studies for internally of what this would cost us as a business, we see that those employees their rents will go up because as a homeowner landlord they're going to pass that on. We can expect that to happen. Stan, you know a lot of teachers as well. Are many teachers renters? I can't, I don't have any statistics on that but I can imagine that there are teachers who rent, especially if you're starting out. You know that wouldn't be out of the question. I think there are teachers who rent. And even homeowners you had mentioned something earlier that there is a million dollar threshold that is mentioned. In other words this would only be a quote-unquote tax upon people who have that extra million dollar property but that's not really in the measure is it? I didn't see it written in the measure. No not at all. That's not on the ballot and that will not be on the ballot. You know that brings us to some of the techniques if we will that are being used to promote this measure. One is to say we can trust our legislature because their intention is only to tax people who are very wealthy. What do you think about that Randy? I think it's real clear what the language says and even if the legislature had an unwritten intent history tells us that sooner or later with a new taxing authority they're going to use it and to the extent they can broaden who it applies to they're going to broaden it. You know when I was describing the language earlier I said a tax on real property viewers might say wait a minute wait a minute says investment real property. Well the word investment doesn't limit what the state could tax in any way. When somebody buys their own home and lives in their home that's an investment. And I'm not stretching the word to get there. You've got probably your biggest investment in your home. So the way it's written never mind what somebody may have intended the way it's written and the way future legislators will look at it is that the state could impose any rate of tax on any real property including owner occupied homes with no thresholds whatsoever and that's very different than what the proponents are describing but I'm just telling you what's there in writing and the history is if the state has the authority to tax a lot of people sooner or later they're going to tax a lot of people. In other words what you're pointing out is that in addition to renters who will be impacted terribly by this it would also be homeowners of average middle-class homes. A million dollars is a fairly moderate home here in the state of Hawaii and it's possible that just the average homeowner will be hit. You just think about it if they started out just taxing rental properties so it only adversely affected renters people would say wait a minute that's not fair why would rich people who can afford to own their own home not have to pay this additional amount where less rich people who are over here renting are going to have to pay it because it's going to be passed on by the landlords as you indicated. So sooner or later if this were to pass I'm pretty confident it would be brought down to affect every owner of real property and people who rent from owners of real property. What you're saying is that we would be giving the legislature a blank check to expand those who are affected by this. I wouldn't call it a blank check I'd call it a blank check book or a box of blank check books because every year year after year they would be using it and the last two tax review commissions have said to the legislature you're going to have to raise a lot more revenue and cut spending because of the 25 million billion dollars of unfunded liabilities things that have already happened in the past that haven't yet been paid for so if you're saying oh the legislature would never go after homeowners the tax review review commissions have looked at this and said they have to cut spending and increase revenues if they're going to balance the books going forward. Well obviously then those who are making the argument for it are basing their their case on what the legislature might do or might not do but voters are not going to have that guarantee in front of them. There's one other thing Stan this may impact you because you have a little young Kiki but this is we're told is for the Kiki and very often that is the most powerful language that is used what do you think about that as an argument? Wow. Don't you let Stan love the Kiki? Absolutely I have young children that are in the public school system and I think one of the concerns that I have is really if you look at on the surface what this constitutional amendment is about it's not necessarily just about teachers and and Kiki right there are no guarantees that the money will actually end up being diverted to an educational fund without any kind of back out of what the state is currently funding in the DOE I think that's one of the concerns that there would be no net gain from this tax to the kids but if we take us a couple steps further back is I think one thing that people don't really think about is that this is a constitutional amendment it is something that we are voting for to fundamentally alter our state's constitution and I know there are a couple ways that this can be done but this is something that would if passed will be something that would be very hard to remove or to take away. Well those are some real concerns that we're going to come back to and amplify in just a moment my guests today are Stanley Lau and Randall Roth and we're talking a bit about what is not really there that meets the eye in this constitutional amendment that is being proposed at the upcoming elections. Don't go away we'll be right back on Think Tech Hawaii's Hawaii together in just a moment. And Aloha my name is Calvin Griffin a host of Hawaiian uniform and every Friday at 11 o'clock here on Think Tech Hawaii we bring in the latest in what's happening within the military community and we also invite all of your response to things that's happening here for those of you who haven't seen the program before again we invite your participation we're here to give information not disinformation and we always enjoy response from the public but join us here Hawaiian uniform Fridays 11 a.m. here on Think Tech Hawaii. Aloha. Welcome back to Hawaii together on the Think Tech Hawaii Broadcast Network I'm Kaley Ikeena and you can see this program on ThinkTechHawaii.com I hope you'll watch it and send it to some friends because it's very informative now back to Randall Roth and Stanley Lau as we're talking about the ballot measure coming up on November 6th 2018 called CONAM the constitutional amendment that would allow legislature legislators in our state to actually take funds from real property to use purportedly for education. Now Randy that whole concept has an understated premise which is simply this the problem with our schools is a lack of money we need to go out and get more money and throw it at that problem what is your assessment of that I think there is a crisis of sorts with public education in Hawaii I think there are some glaring problems the national assessment of education progress the NAIP the nation scorecard put us once you adjusted for demographic factors which the experts say you need to do in order to have a fair comparison we're last in the nation in every category fourth grade reading fourth grade math eighth grade reading eighth grade math last in in the nation so doesn't that make the case that we just need to put more money out there in order to get a higher ranking or are you suggesting that money is not the problem I'm a proponent of public education and I'm never going to argue against more money what's been proposed I think wouldn't result in more money going there but to understand the situation you begin to say well what is our current level of funding on a per pupil basis which is the only way to make sense out of how we compared other places the last year that we have data that can be compared to other states is two years ago and we're spending on operations alone about $14,000 per student that's the 15th highest in the nation so is that adequate or inadequate the question isn't answered by that but we're toward the top we're 15th in in the nation the dollar amount is 17 percent higher than the mainland average on a per pupil basis is 17 percent above the mainland average enough opinions will differ according to the U.S. commerce department the cost of living in hawai statewide it's higher on oahu but statewide and we have a statewide department of education the cost of living is 18.4 percent higher than the average on the mainland so if our per pupil expenditures put us at 15th in the nation and they amount to 17 percent above the mainland average and the cost of living statewide in hawai is only 18.4 percent more than on the mainland i'm not arguing that the current funding is sufficient i'm simply saying there's a real issue as to whether the legislature has really provided what they think is adequate uh or not i believe what they've been providing reflects their opinion of whether more money to the DOE would be wasted or not i think they view this DOE as a bucket filled with holes and they're hesitant to put money into that bucket that's going to go through holes in other words not be used effectively i believe strongly what the governor's been saying now for nearly four years and the current school board chair has been saying for quite a while and i'm told the superintendent is saying we need to radically change this top-down overly centralized bureaucratic department of education into a school-centered or school-empowered system and it's doable it's not a silver bullet it wouldn't happen quickly it wouldn't be easy but it's an initial essential first step toward having a system where teachers will decide what the priorities are where teachers will have some control over who their principal is where teachers will have that flexibility to focus on the kids that they don't have now and that's what it's all about is creating a system that supports teachers so that they've got the freedom they've got the resources and they've got the encouragement to focus on the kids that's quite a comprehensive overview in short you're saying that even if we raise money with this constitutional amendment when we put it into the DOE we have no assurance whatsoever that it's actually going to result in a better system because what we really need is to change the system that we already have and you've suggested some of the measures by which that's and let me just say if if this passed and and even if more money went into public education and like i say i think money is green i think if more were coming in from a special fund from the new tax they would just allocate fewer general funds so i don't think it would really increase the money but even if it did we've got a system that is is dysfunctional it's not the people it's it's the structure and you've got to change that structure and then when you're beginning with the teacher's priorities and that's what's driving this whole thing to the extent that it turns out that the current level of funding isn't sufficient to do what we as a people want our public education to do then we can support it see one thing i can guarantee is that if this con-am passes it's not going to change the legislature's priorities and so if the priorities next year are the same that they are this year they're not going to want to put money into the DOE more money into the DOE any more next year than they do this year right so you've got to get them to look at the DOE as having changed to where it would be a good investment and i'm afraid this con-am is simply distracting from the issue that really needs attention and that is transforming the Department of Education the way the governor has said the school board chair has said i'm told the superintendent has said the public needs to support that and with the focus on this con-am it's like that's being lost so the constitutional amendment is really the wrong medicine we need a different fix all together and that fix is available even without this draconian measure now stan you represent a group of community leaders and business people who've come together what's the name of the organization the affordable hawaii coalition and and what is the basic game of this group well so the basic game is really to educate the public about the downfalls and why this is bad policy why this con-am is so bad for the public and i'll be honest when i first read the measure even being a part of the ahc i thought this was a great idea but it's not until looking at it further what is what is a surcharge what is being imposed what is being taxed where's the money going and you start to realize that there are so many holes with the language and what is being proposed that like randy said what is an investment what is investment property what is qualified is it my primary home which like randy said that's the largest investment that most people make well we talked earlier about the fact that what is touted is the fact that it's supposedly for the keiki for the teachers so on an emotional level it's very hard to stand against but do you think people are starting to get the message that we have to really think about this it can't be a case of the ends justifying the means absolutely and and you know for people who say you know i want teachers to make more money you know right now we've got some real shortages in certain areas primarily in special education and in certain rural areas and some high school specialty classes math and physics and that sort of thing but what hsta the teachers union in effect says is let's pay everybody more and let's um let's not distinguish between those teachers who are doing an especially good job on the one hand and these other teachers that wouldn't have a job except the union contract requires principals to take them if they want to work at that school the whole structure is that the the hsta in terms of how it focuses on protecting the weakest teachers as opposed to providing added value to what the the vast majority of teachers are doing is as broken i think as is the government structure of the department of education so what you're talking about is that we are looking at a case where the union may not be able to help the members of the union as well as it used to in the past the union could be out of the touch with union members this has been a tough year for the union in some senses recently there was a decision at the united states supreme court called the janice versus the afsc me in which unions were basically told no they they can't just take union dues out of the paychecks of workers what what do you think this portends for union responsiveness to its members yeah public sector unions and right now we're talking about the teachers union whether they like it or not are going to have to change a lot the department of education the governor's structure has to be transformed but it has to be transformed in order for the system to get better the teachers union to survive is going to have to radically alter how they approach things because in the past they could count on union dues or agency fees now because of the supreme court decision you mentioned sooner or later their members are going to figure out that giving anything to the union whether you call it agency fees you call it union dues giving anything to the union is like going to church and putting money in the collection basket you do it if you want to and the amount you put in is what you want to put in frankly the public sector unions in hawaii i think have not been honest with their members yet and i think sooner or later they're going to have to be there's a law in hawaii right now that basically says the workers only have a limited period of time once a year in order to to try to get out of paying union dues and then it's a process where they're in effect going to be shamed by other people the law of the land now that that janice decision has been made is that at any moment this afternoon if they want to call up their union and say i'm not going to pay any more money then the union cannot take another penny of their money and once the members get it the unions and now we're talking about the teachers union are going to have to figure out how do i add value how does the union add value to these teachers in a way that they appreciate so much that they contribute that they continue to give us a thousand dollars a year or whatever well union you would seem that we've come to a time when the general public the voting public as well as union members can send a strong message to union leaders as to what they want in hawaii and that's what this ballot initiative is all about and the teachers union is in a difficult position on the one hand they're saying we're doing a great job for our members on the other hand they're saying that public education and teacher pay has been grossly below what is you know what it should be for for decades well how can the teachers union both have been doing a good job and funding and teacher pay be ridiculously low there's there's something not quite squaring in that to put two and two together so to speak i want to say thank you for being on the program today randy you've added a lot of good insights to this issue thank you thank you so much uh as well stan thank you we're going to wrap up right now and i hope that you've heard from two gentlemen who've really studied the matter that there's really a great deal of concern about this conam measure and it's important to tell people this isn't necessarily going to help the teachers at all in fact it actually may hurt teachers and keiki as it raises rents as it raises the cost of being a homeowner as it damages the economy and more than that as it gives incredible power to the state government to come in and do something that may damage the role of the counties if this concerns you stay informed and to get a hold of let me ask stan again the name of the organization and the affordable hawaii coalition and we have a website at affordable hawaii.org go very good i'm kelly akina and this is think that kawaii is hawaii together until next time aloha