 ThinkTek Hawaii, civil engagement lives here. Aloha, and welcome to Talk Story with John Wahee, another good show for you this afternoon. We are considering a very important issue that's going to be on the November ballot at the general election. And what it is is that the legislature of the state of Hawaii has passed in the last session a constitutional amendment which needs to be ratified by the people of Hawaii. And what the amendment would do is going to be the point of our discussion. What it purports to do is that it purports to allow the legislature and I guess the government, the state government to tax investment property as a way of funding education. And why this is important is because without this constitutional amendment the state, the ability to tax real property really belongs within the jurisdiction of the city and counties or the counties of Hawaii. So as our guest this afternoon, we have Mr. Stanley Lau, who sadly is the chair of the Affordable Hawaii Coalition. Affordable Hawaii Coalition. Yes, that's right. And you are, and the title of our show is whether or not this effort by the state legislature actually is really support for public education or is it misguided public policy. Well, before we begin, tell us a little bit about yourself. What do you do? Sure. Yeah. Besides being chair. Besides being the chair in my daytime job, I'm actually a small business owner. I run a company called Hawaii Tech Support. We do IT services and we have been in business for 14 years. Well, you're the people that I desperately need, but never doing the normal hours. I desperately need tech support like sometime like 11 o'clock at night. We have 24 by 7 options. You do. Well, welcome. Are you married? I'm married. Children? I have three children, sixth grade, my son, Noah, and then I have a daughter, Joey, Josephine, in the first grade and a third daughter, Evangeline, that's a three-year-old. Well, with young children, I mean, I'm sure you're interested in education. Yes. Now, do your children go to public school or? Yeah. So by the two older ones, they go to public school and then the third one, once she gets out of preschool, she'll be joining the public. And do you mind if I ask you what school or what area? Yeah. We're very proud to be at Moanalua Elementary, great school district, great teachers at the school, great principal and staff administration, and I know even with the middle school and the high school, just outstanding education. Well, you know, and where did you go to school? Yeah, so I graduated from Pearl City High School. Oh, right. So you're a product of our public school? Absolutely. Yeah, I love my experience in public school and then I was fortunate enough to go away after high school, so I went to university on the mainland in California in Los Angeles. And came home? And came home. And came home after staying there for being in LA for almost nine years. Okay, so obviously I take it just from your enthusiasm, a supporter of our public educational system. Oh, yes, yeah. And do you participate in any of the activities and support the school and do all of that sort of thing? Yeah. So my wife and I, my wife's actually a former DOE educator. She's a teacher. She was a teacher, yeah. So when we first, she was a teacher. Well, I was a teacher, always a teacher. My wife has told me that, and more times than, yeah, more times than. Her passion for teaching, that doesn't, that has never gone away. I don't know. Like you said, it will never go away. So she still does teaching education in different capacities, but no longer in the DOE, but she, we're both very involved with our children's education. We try to supplement what they do outside of school. We attend all the meetings. My wife's very involved with the PTO at the school, you know, through different organizations like Boy Scouts that are active in the school. We're able to do things like, you know, campus beautification and helping out. So we're very involved in the school. Okay. So November ballot coming up, I don't know. There is a provision. Maybe you know the number of it or I don't write on hand, but there will be a provision on the ballot that will be up for possible ratification by the people of Hawaii. Right. And what it apparently, what it purports to do is that it allows the state legislature and the governor, I guess, because this would be a natural piece of legislation that has to occur. It will allow the state of Hawaii to tax investment property, whatever that means, to raise money for education. So it seems like this would be a worthy cause. I mean, this is funding public school education. And yet you find yourself, somebody like yourself who is a young, you know, has a young family, relatively speaking, and who is active in our school district, you find yourself being the chair of something called the Hawaii Affordable Coalition, or Affordable Hawaii Coalition, right? A-H-C. A-H-C. Yes. Affordable Hawaii Coalition. And the purpose of that coalition, as I understand it, is to educate people about the negative consequences of what would happen if that amendment passed. So how does one, somebody like yourself who is a supporter of public education, find himself and I assume his family on the other side of that issue? Right. That's a really good question. And as far as the Affordable Hawaii Coalition goes, it's not just about this issue. And what we're really looking at is how can young families, how can just people in general residents that, whether you grew up here or want to stay in Hawaii, how can you continue to stay in Hawaii addressing costs of living issues, future growth, education-type issues? But with this constitutional amendment, one of the challenges is, like you said, we're not in opposition to education. We are. I'm a firm believer in education. That's why we send our kids to public school. But the challenge really is, if you look at how this constitutional amendment is posed before the voters and what the implications of it are, I think that's what we really need to look at is, if you look at the iterations and how it started and where it is now, like you said, as it is written on the ballot, it basically asks people if they're agreeable to a surcharge on investment real estate or investment real property for the benefit of public education. Yeah. And it seemed to me, OK, I'll take, play devil's advocate for just a little bit. And it seemed to me, and by the way, I say that so that there's no misunderstanding. I'm actually on your side on this issue. But as the devil's advocate, there are people who basically say, why not? Why shouldn't we tax what's essentially a lot of rich people coming to Hawaii, you know, buying houses that people like yourself, well, maybe you could afford them. But I can tell you, I couldn't afford these houses that these, some of these investments I mean, why shouldn't we tax them and tax the property that they're on and use it to fully improve our schools? But what's what's bad about that? Right. So that's one of the things that we're really trying to educate people. And the the sponsors of the bill and the proponents of the bill have really been providing false information on what the tax base will be. If you look at the original iteration, it did specify that it's transient accommodation, so hotel type properties and residential properties that are over a million dollars that cannot be claimed as primary residences. So in the original form of the bill, it had that. But if you look at the original form of the bill, it was restricted to not just something vaguely called investment properties. It was restricted to transit accommodations and actual anything over a million dollars. Right. That is a second home. Doesn't have. And also a second home. Right. Yeah, I was going to tell you that because, unfortunately, in Hawaii, all you have to have done is bought a home, you know, 30 years ago, like some people, my neighbors, yeah, and live in their house forever. And it's worth over a million now. Right. And that's a really good point. We talked about this being something that targets just the rich. People don't live here. They have vacation homes. And that's not the case at all. So, for example, my grandmother, who came here about 50 years ago, immigrant, you know, so she worked in Chinese restaurants as a dishwasher. And like you said, in the late 60s, early 70s, actually, she was able to buy a home, right. And with that, it was possible to buy a home. And it was very reasonable, even for what she did as a dishwasher, she was able to buy a home. So now she lives with my father and my dad takes care of her. But she has, you know, rental real estate that, you know, if there's something like this passes through, it doesn't affect just the people that are outside of the country that are coming in to invest in real estate. It would affect my grandmother, you know. So what happened was somehow the direct focus of this initiative started to just lose its focus. So now it can be applied to anyone. It doesn't matter. Yes, yes. Anyone whose home is, well, anyone, period, because there's no, there's no limit on it, is it? It's stated as investment real estate. So even the homeowner's exemption that was clearly written the first time around, that's been removed. Wow. Yeah. So if you look at it, you know, as is what is published or will be published on the ballot, that there are all the restrictions were removed. And this would be, in a sense, another cost that would be added in, like, for example, one of the things I don't think people, a lot of people realize because, you know, they drive down the Nimitz Highway or Alamoana Boulevard and they see all these huge condos going up. And in our, a lot of people's minds, I, that is the target that they have in mind. Right. But actually, most rental units in Hawaii seem to be small, small business buildings that somebody, you know, bought a piece of property years ago, and it's their retirement income or something, built a few apartments. My mother-in-law did that. She was born here, but raised in Okinawa, put all her savings together and bought, what, I think it was like a six-unit rental situation in Pearl City. And that, she would end up subject to this, maybe. Yeah. I mean, it's going to be very likely. She's not, she doesn't live there. No. Yeah. So no homeowner's exemption. That's investment real estate. And in fact, there isn't, this doesn't even make a provision for homeowner's investment. No. You know, one of the things that I heard was that there was supposed to be a companion bill, an actual implementation piece of legislation that went along with this so that people would know that if, in fact, they passed this constitutional amendment, what would happen or at least what would happen initially. Right. And that wasn't done. No. And actually, just to go back a little bit when you mentioned, you're right, there is no provision for homeowner's exempt exemption. And the reason why I bring that up is if you look at the opposition, that is something that they drive home and they repeat regularly. Is this idea that there's still some kind of one million dollar floor, right? And also there's a homeowner's exemption, but that doesn't exist. So it's been talked about, but that's not what's on the ballot. Well, I tell you what, we are going to take a break right now and we'll be back. And when we come back, I want to talk about, well, the fact of just property taxes in general in the city and county of Honolulu and the state of Hawaii. We have an interesting conversation going on with Mr. Stanley Lau from the, who is the chair of the Hawaii Affordable Coalition talking about an amendment that is being proposed for the Hawaii state constitution. We'll be right back. Stay tuned, folks. There wasn't a woman who lived in a shoe. She had so many children, she didn't know what to do. She gave them some broth without any bread and kissed them all soundly and put them to bed. Hunger is a story we can end. End it at feedingamerica.org. Back to talk story with John Wahee and our special guest Stanley Lau, the chair of the Hawaii Affordable Coalition. We are, among other things, discussing an amendment that has been proposed for the Hawaii state constitution that needs to be ratified if it's going to be effective and what this constitutional amendment would do if you work with us for the first section of the show is allow the state to tax the property that supposedly investment property to fund public school education in Hawaii. And that sounds like a good idea, but it may not be. It may be actually malevolent. For those of you who have a question and would like to call in, I'd like to want to encourage you to call 808-374-2014. And we also can do the Twitter and all the rest of that stuff, but I don't know how to do that. So they'll probably do something across the bottom of the stage of the monitor. Okay, here we are. So we were talking, we just left off and you, and I'll tell you that they were just discussing the fact that there was supposed to be accompanying legislation with all of this, but that didn't happen. What was the process that, or maybe, I don't know, what happened at the state legislative? Did you follow it all the way through? Yeah. So I guess that's actually one of the things that I wanted to get, you know, some professional expert advice on how. Well, you flattered me if you're going to ask. Really, I think the question is, how did a bill that went from the Senate to the House and then now comes before the voters? How did something like this get into place? What is the proper process? Because from what we've seen, if you look at the committees that were involved in hearing and hearing testimony about this, this is a huge bill, and just for viewers that don't know what the bill is trying to do, it's trying to raise, the number has been $500 million. It's trying to raise $500 million by increasing the tax on supposedly investment property, but there is no exclusion for normal homes or anything else. Right. $500 million is a lot of money. It is a lot of money. And just to put things into perspective, that's about 25 percent of the DOE's current budget. Well, 500 million a year now, not one time. This is a 500 million a year. And if you take it out of your property tax, what you're suggesting it, there'd be some kind of relationship between raising 25 percent addition for the Department of Education budget and the cost of your property tax. Yeah. And just to be clear, too, this is not in replacement. This does not replace the taxes that the counties currently are privy to, that they are the only ones that currently collect. This is on top of existing property taxes. Well, one of the interesting things are, you know, is the process really, or are the processes that you need to follow in order to amend the Hawaii State Constitution? One way and the best known way to do it is to have a constitutional convention, which is also up for the idea of whether we should have one is up for the voters' consideration in November. And with that process, you would actually have an assembly of delegates get together and look at the Constitution, spend some time studying it, and then, you know, propose amendments that will then be subject to ratification. Actually, that issue or the property tax issue was taken up at the last constitutional convention at Hawaii had, which was 1978. And in 1978, the debate was whether or not counties should have a greater degree of home rule, the idea being that the counties were the government that's closest to the people. Right. I mean, it's fun, you know, if you're a politician and you're at the state legislature, you get to deal with the big issues, you know, tourism. You can, you know, deal with Donald Trump and all the rest of these things. You know, I mean, you get to have fun. But at the city council level, you deal with the mundane things. You deal with ditches and, you know, all of these everyday stuff, public safety. Yes, yes. And so back prior to 1978, there was no mechanism for the counties to raise their own funds that they were specifically responsible for doing. So there was a kind of a divided authority as a citizen. You really didn't know and involved the property taxes. You really didn't know who was actually raising the taxes because the rate that you paid, I think it was the rate, was set by the state legislature and the governor. So they would say that you need to pay 60 percent of your value or something like this. And what the counties did was decide the value of your property. So it was this sort of this divided authority. And what that meant then was that they would be playing against each other. You know, they would be not necessarily thinking about the funds that were needed to run government, but trying to see who was going to be more popular with the voters, you know, who could get blamed for the tax increase that they knew they were going to do it. Right. So that all changed. That all changed. And it was ratified by the people of Hawaii that from 78 on, after a transition period, the counties would be responsible for property taxes. So anything and therefore for people, for the citizens of a county and for the state of Hawaii, you would know who was responsible for your taxes. Right. So that is one way of doing this. And in that case, wouldn't that be clear in terms of the kind of the separation of power? Yeah. And also, you know, from what the county does, like you said, critical services, sewer, trash. And they had to have their own. And what you had to do then was you had to justify why property taxes went up. By the way, nobody likes property taxes. I love that word justify. Yeah. That's that's one thing that we really, you know, when it comes to more money and the need for more money, I think the idea of justification is it's big. We should. Oh, I agree with you. And so you, the person, the colloquial way of describing that type of a policy was the people who spend the money should be the people who have to justify raising it. Yes. You see, and it was clear in that case that and that's what that was an attempt to do to answer your question fully, though, is the if you're not going to have a constitutional convention, the other mechanism, the second mechanism for amending the state constitution, which, by the way, the reason why we need this amendment, if it's going to happen is because the whole existing Hawaii Constitution specifically says that property taxes belong to the counties. Yes. Okay. And this would be an exception. So the other way to do that would be to have the legislature pass either by 50 percent of its members in two sessions or by two-thirds of its members in one session the ability to put on the ballot a one issue amendment. Yeah. And this is what this is. So in this case, they've chosen to use that mechanism. You know, it's interesting to me that what this does is it's really interesting in that, first of all, it's purported to be a tax on unpopular people, people who are building mansions that aren't here, that are supposed to be foreign money and they're all coming in and they're buying up everything in Hawaii anyway. Well, I know a lot of native Hawaiians who have a totally different view of who's foreign, but anyway, at least for most of us, these are the bad guys, right? So you do that. And then the second thing is for good reason because we're going to be doing it for the children of Hawaii. But in that whole discussion, in that whole strategy, nobody talks about the fact that what you're really changing is the voter's ability to know who's actually raising their taxes. You're splitting that authority again. And there's that conflict again. So you're right. On the front side, it looks like a tax that the people who can pay aren't here. There are people we don't like. So it's like in the schoolyard. And it supposedly benefits our children in certain ways. That's kind of the claim. But you're right. On the back end, and this is from talking to different people at the county level as well, in knowing what allowing this would do to the counties, Big Island, Hawaii. And also to the cost of living in Hawaii. Absolutely. Because what you have is you have somebody who can add a tax to an already tax system. In other words, they have come in and say, well, we just raised it this much for public school education, but they're not talking about the fact that your property went up in Hawaii, as it does all too often these days, and your taxes went up by a few thousand dollars. Yes, it's almost like a built-in automatic pay increase, right? Yeah, it is. And the reason why I'm so impassioned about these issues, you know, I have a small business, so we have 17 employees, not a large company. But looking at our employees, I took a poll. We have about 76% of our staff rent. Ah. And the renters are one of those. That's investment property. That's property that's specifically targeted. Yeah, and I'm not, I'm sure I'm not the only one that has employees that rent, even family that rent, right? So it's not just because I'm a property owner. My concern, and it's really the concern of the coalition, the Affordable Hawaii Coalition, is what does something like this do to people living here? Yeah, you mentioned earlier that this just, it's not just about this amendment, that actually your coalition is about making Hawaii more affordable in general. And this would be unhappening that goes in the opposite direction. And in my opinion, it's just bad policy. You should never separate out the people that spend the money from the people that are trying to raise it. It's just hard to follow. I want to thank you unfortunately. Our show is up, and I want to thank you very much for being here standing. And I hope that we have been able to spread some light on this very important issue. Right. Thank you. Folks, join us again in two weeks with Talk Story with John Waihe.